Strategic Compensation: Plastco Packaging Ltd Case Study, Solutions

This case study examines the compensation challenges faced by Plastco Packaging Ltd, a small plastic bag manufacturer. The essay identifies key issues such as high turnover among inspector/packers, poor production performance, increased workload due to machine management, and unequal pay structures leading to employee conflicts and dissatisfaction. The root causes are analyzed, linking these issues to the company's compensation structure and its impact on employee motivation and interpersonal relationships. The study recommends several solutions, including restructuring compensation, hiring additional operators to reduce workload, implementing a remuneration policy with rewards for both production quantity and quality, and promoting communication to improve relationships. It also emphasizes the importance of equal pay and highlights how fair compensation can enhance employee motivation and productivity. Finally, the study concludes that Plastco Packaging Ltd needs to develop its compensation practices to overcome these challenges, improve efficiency, and enhance its brand image.

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Strategic Management

STRATEGIC COMPENSATION 1
Introduction
Plastico Packaging Ltd is the Small size manufacture of plastic bags based on the West
coast. The organization sells these bags to the retail sector. There are three main functional areas
of the business (1) is the production of plastic, (2) printing the names on the tubing and (3) is the
Manufacture process of the bags. The organization has around 14 employees who work in a
different department.
There are some challenges the organization is facing with the compensation structure.
The essay will cover the compensation issues and root causes of those issues also
recommendation to overcome the issues.
Challenges and recommendation to overcome
1. Identified challenges
There are many challenges facing the organization such as the turnover between
the inspector/ packers which is high as compared to the operators and utility workers,
utility worker’s turnover is almost just one-third of inspector/packers also less than
operators.
The second challenge is a poor performance by the production department as they do not
meet the production target. The team is not even providing a minimum level of production which
is affecting the business. Each operator handles two machines this lead to an increase in the
workload, as a result, the new challenge that arises is a poor quality of products.
One more challenge is that unequal pay structure creates conflicts between employees as
well as creates dissatisfaction, hence the operators blaming mechanics and inspectors/packers.
As a result, poor relationships lead to increase unproductivity of the organization (Heckscher,
2018)
2. Root causes of identified problems
The challenges of increases turnover arise due to the compensation structure paid
by the company. The HR hired more inspectors with less pay. Less pay structure leads to
an increase in the turnover of the inspector/packers.

STRATEGIC COMPENSATION 2
The poor performance of the manufacturing department straightly relates to the
compensation structure of the manufacturing department. High pay structure of manufacture
department leads to a decrease in the inventory of this department and each of the three operators
has to manage two machines at a time that increase the workload. Increased workload leads to
create more waste as well poor quality of products (Hassan, 2019). Hence the management needs
to increase the inventory and decrease the compensation benefit of this department. Unequal pay
structure among male and female workers also creates many conflicts between employees. This
is the root cause of the poor interpersonal relationships amongst employees (O'Neill, 2019).
3. Recommendation to overcome the issues
The HR department of the company has to take necessary action and change the structure
of the compensation. The HR of the company needs to hire more operators so that the
workload from them can be decreased. Least workload leads to increase the productivity and
decrease the wastage. Increased operators lead to an increase in the production target, hence
they can meet the highest level of production with quality (Ladegaard, 2019).
Apart from that, the HR can introduce the remuneration policy so that the employees will
be motivated to perform well. The reward system should be divided into two parts such as one
some rewards of the highest production and other benefits for quality production. According to
the Maslow’s motivation theory, better rewards and remuneration benefits attract employees to
perform well as well as retain them for the long term (Lester, 2019). Therefore these rewards will
lead to an increase in the production of bags also the quality of products. As a result, the
increased quality will satisfy the customers. Also if the inspector/packer team gets less pay, they
must have other benefits such as health and security. The security benefits bring peace of mind
also motivate female employees to work well.
To increase interpersonal relationship the HR has to encourage communication amongst
employees (Okeke, 2019). For this, the HR of the company can conduct the events or meeting so
that can know each other and build trust. The better relationship amongst employees also creates
new innovative ideas. Hence it will help in increased the overall organizational productivity.
When it comes to equal pay, there is an act that states that men and women should be
paid equally if they are doing equal working hours. The HR of the company has to provide equal

STRATEGIC COMPENSATION 3
pay to all the department of the company. Through equal pay, the HR of the company can
establish a positive environment with the alignment of working values.
Hence Fair compensation affects the motivation of employees of the organization and
their relationship at work (Asis-Castro, 2018). Hence it is important for PLASTICO
PACKAGING LTD to develop their compensation practices so that the company overcome
challenges and increase the organizational productivity.
Conclusion
It can be concluded that Compensation practices of the company were poor and affected
the internal external environment of the company. The HR department of the company has to
take necessary action as they needs to implement some changes in its pay structure and other
rewards, so that the organization can overcome the issues, serve efficiency and create brand
image.

STRATEGIC COMPENSATION 4
Bibliography
Asis-Castro, A. a. (2018). Predictors of Humanistic Sustainability HRM Practices. DLSU
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Hassan, S. a. (2019). The mediating effect of knowledge sharing among intrinsic motivation,
high-performance work system and authentic leadership on university faculty members’
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Heckscher, C. C. (2018). The New Unionism: Employee Involvement in the Changing
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O'Neill, S. 2. (2019). Gender pay gap grows. . New Scientist, 241((3223)), 45.