TOTAL REWARDS; EMPLOYEE & LABOR RELATIONS; GLOBAL HR - King
King pays at market rate and conducts a salary survey every three years to ensure the company remains competitive. Both practices served King well over the years, even with the growth in the number of full-time employees and an increasingly complex compensation system. Two years ago, Call restructured the compensation system by broadbanding 14 salary grade levels into a far simpler system of five levels. Call expected some resistance because there are always people who hate change, but he hadn`t anticipated the outcry from some employees who claimed it was nothing but the loss of promotion levels and a manipulation of the system. He has spent a lot of time since then educating staff on the system, and in the two years that have passed, the outcry quieted a bit, but there are still claims of salary compression. Call knows there are managers who have abused the system, using the higher salary ranges to reward their favored few regardless of performance or longevity. He concedes the new system isn`t perfect, though it is simpler to administer. Now, however, he spends more time worrying about results than he ever did in the past.
The merit bonus plan had been Honduras`s baby. She thought it was a good way to link compensation to actual results, and it was a key compensation element in the early years, when Dean wanted to encourage innovation and creativity. It may have been effective early on, but Call now sees it as an expensive giveaway that creates employee anxiety. He has complained to Smith that it`s not working and ought to be scrapped. "Whatever they get," he says, "it`s never enough. They`re always dissatisfied. I don`t know why we bother."
Employee benefits are another issue. Benefits became increasingly expensive over time, and every piece of The King Company is under scrutiny for cost effectiveness. King offered fully paid health coverage to all full-time employees from the outset until 2006, when double-digit premium increases necessitated a change. Laying its cards on the table, King conducted information sessions with employees to ensure they understood the costs of insurance and the financial health of the organization. Cost-cutting was a given; the question was what to cut. An employee survey was conducted to determine what cuts would be most acceptable to employees. The focus was to determine if employees would accept less health coverage but continue with insurance fully paid by King or if they preferred to pay a portion of their premium and maintain the same benefit coverage as in the past. It was a contentious discussion before the decision was made to maintain coverage with employees paying a part of the premium. The employee-paid share has risen every year since, with complaints that it is nothing but a pay cut.
Despite some grumbling, Call thinks employees do well with King`s benefits package. King supports retirement savings by matching employee contributions to their 401(k) accounts at 50 percent of the employee contributions up to a maximum contribution of 5 percent of the employee`s annual salary.
Paid time off is available as vacation time and sick leave. After one year of full-time employment or the equivalent, employees receive 10 days of paid vacation, and sick leave benefits accrue at the rate of 12 hours (1½ days) per month worked. Both unused vacation time and sick leave time can be carried over from year to year. Vacation time carryover is limited to a maximum of 10 days while accrued sick leave can be carried over from year to year with no ceiling.
Those are just the major benefits. There are some other nice perks as well. Scholl lobbied hard to get Madison and Dean to agree to tuition reimbursement for work-related college courses. Despite having few employees using the program, Call thinks the benefit sends a positive message to employees that King supports educational development. Some employees work flexible schedules, and some telecommute a few days a week if it is appropriate to the job. Varn manages the wellness activities, and there is also an employee assistance program. Overall, Call thinks it is a good benefits package, but he knows change is coming.
The memo from Smith said that all compensation practices are on the table for discussion and that some significant changes would be forthcoming. With the bonus system in place, annual base salary adjustments have been kept low, generally at a 2 to 2.5 percent increase. Call suspects a salary freeze is in the offing, and he braces for the repercussions of disgruntled employees and the loss of some of King`s best employees as their skills are lured away by higher-paying competition. He wonders if Dean and Smith really understand how important it is to stay competitive in this industry.
Please answer and discuss the following questions in a 4-5 page paper, with no less than 3 references from reputable sites.
1. Discuss broadbanding. What are its strengths and weaknesses? Is this a viable program for The King Company? If
not, what would you replace it with? Why?
2. Discuss the bonus system at King. How could it be improved? Or, should it be replaced? If so, what would you
replace it with? Why?
3. Discuss how FMLA fits in with other company leave policies. Is it better to have one "time off" policy (e.g., allowing a
set number of days missed) instead of individual absenteeism, sick-days, vacation, short-term leave, long-term leave
policies, and other policies granting time away from work? Why? Support your logic with research.
4. How should The King Company address the issue of the FMLA employee who was mistakenly terminated?