Compensation Strategy of an Organization essay


The most important investment for the success of any business enterprise is the employee. A compensation program is basically meant to draw, keep and reward the best employees who are responsible for a company’s augmentation and prosperity. Over and above, compensation is the kind of payment offered to an employee in return for his/her contribution for the success of a company. It may be in the form of base or variable pay depending on the programs offered by a company.


Compensation in actual sense involves a myriad of incentives that an organization utilizes to magnetize, recompense, and maintain good employees. Most employees desire to succeed in every competitive environment thus a company must develop a well planned compensation plan. The plan must incorporate employee motivation factors, equity, and it should also control compensation expenses. A good compensation plan reflects the culture of the employer. It is therefore of great importance that an employer should institute an effective compensation philosophy.

Programmer’s Investment Corp (PIC)

Programmer’s Investment Corp (PIC) is a direct marketing service and database management company. PIC concentrates in cutting edge order processing solutions. It has a call centre department whose role is to deliver top quality development and management when it comes to customer retention. PIC’s client service section processes thousands of calls on a daily basis. PIC’s agents are qualified in a range of programs including customer retention.

Currently, PIC presents an individual incentive plan for employees.  In this program, employees are rewarded for each customer retained through their clients.  This basically means that whenever a customer cancels their program, it is upon the agent to retain the customer. If the customer decides to stay in the program, the agent receives an incentive pay for the triumphant retention. Consequently, the more customers an agent retains, the more pay he/she receives.

In any organization, the most persistently revisited labor concern is sustaining the employee pay fulfillment.  This is the reason as to why PIC labors to compensate their employees for the hard work they do. Accordingly, this incentive adds on to an employee’s base pay. This means that employees can increase their pay in relation to the more successful customer retentions accomplished.

Compensation Challenge at PIC

At PIC for instance, if Customer A calls in to terminate the program and an agent saves him, the PIC agent will get $1 for the save. However, incase the same customer calls in the following day to cancel again, the PIC agent will receive their $1 but does not guarantee a long term save. This is different from the incentive program of a competitor company called Ventus. The Ventus incentive program is designed in such a way that an agent gets the incentive pay per retention including the months that the customer sticks with the program. 


Compensation Strategies at SPi Global

SPi Global is another company in the industry that offers diversified knowledge process outsourcing and customer relationship management.  Compensation strategy at SPi Global is more appealing especially to their agents. This is due to the fact that it guarantees a pay for a long term save (SPi Global, 2011). For instance, if the same customer calls SPi Global to terminate a program and a SPi Global agent retains the same customer, the agent will get $1for retaining the customer. Additionally, the agent will receive an extra .75cents incase the customer continues with the program after the first termination call.

Consequently, the agent will receive .50 cents after 60 days of the remaining program following the initial 60 days, and finally .25 cents after 90 days. Thus the incentive program at SPi Global ensures that an agent continues to receive incentive pay as long as the customer continues to stay in the program (SPi Global, 2011). This eventually makes the long term program more successful. In fact, long term save creates a lot of returns for the company.

Recommendations for an Effective Compensation Strategy at PIC

Establishing an effective compensation plan for an organization is a very sensitive issue as the management must take into account the emotions of the agents. This is because an emotional agreement between the agents and the management forms the customs, constructs relations, recognizes the ideals of the company and establishes the basis for upcoming accomplishments of the company. It is always very important for the management to create a plan that works for the agents.

As for PIC, the management should incorporate a good compensation plan for the services rendered by the agents. Due to the fact that the agents are the face of the company, the management should introduce a better base pay. This is a non-discretionary compensation that does not fluctuate in accordance with the performance or results attained. In most cases, the base pay is usually determined by an organization’s pay beliefs and arrangement .

The management of PIC should introduce this in order to retain the best agents. Variable pay is also another system that ought to be introduced (WorldatWork, 2007). This kind of pay changes directly with the level of performance or results achieved. An agent who retains a certain number of customers who intended to cancel the programs should be rewarded. For instance, if an agent retains a thousand customers a month, he should receive an amount say $500 on top of the normal pay he is to get.

On the other hand, PIC should introduce a system in which there is a short-term incentive pay. This should be designed in such a way that it focuses on reward performance over a period of twelve months or less (WorldatWork, 2007). All these should be added to the pay system in which an agent receives $1 for retaining the customer. Thereafter, the agent should receive an extra .50 cents when the customer stays in the program after 30 days of the first termination call. The agent should receive another .30 cents after sixty days of remaining in the program after the first sixty days, and .20 cents after ninety days.

Reasons for Selecting the Above Strategy

Incorporating performance based compensation plans is vital if PIC is to enhance output and capitalize on their return on investment. These compensation plans are intended to reward agents who perform well, that is those who retain as many customers as possible. These compensation plans are based on pay plan that is tied directly to the results PIC sees as valuable. Furthermore, research indicates that good compensation rewards are having very positive impact on performance of employees.

Impediments to the Above Strategy Including Contingency Plans

This strategy is very effective only that it is bound to meet certain obstacles. This is because it may be difficult to frequently gauge and offer advice on performance . It may also not be very easy to closely tie the pay to the success of objectives and rational performance measures. The company may also be at risk of relying on the base pay as the truly considerable system of compensation. The best contingency plan for the above strategy is to shelve the base pay in consultations with the agents. This is as long as the management is able to pay.

How the Strategy Addresses PIC’s Challenges

The main goal of this strategy is basically to give the right rewards to the agent (WorldatWork, 2007). This is because compensation forms a vital motivational component when rewards are given as a result of the attainment of desired organizational goals. The above strategy addresses PIC challenges because the agent works knowing that at the end of the month, there is an increased base pay.

 This is in addition to the guaranteed long term save. This strategy works for both the organization and the agent. The strategy ensures that PIC does not lose talent because they will come in handy during the hard times. At the same time, the agent remains motivated to work even harder.  


Effective compensation plans are usually intended to motivate agents and customer service professionals. This is all geared to achieving goals and striving for excellence. Most well designed reward systems usually create optimistic effects. Consequently, the compensation plans have the effect of keeping staff motivated and focused on the customer while sustaining corporate objectives.

Compensation Strategy of an Organization essay

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