AGBUS 1220- Human Resource Management

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Case 2
COMPENSATION MANAGEMENT

Lea Reyes is newly promoted human resource supervisor of a big and modern hospital in Metro
Manila. The hospital is a medium-sized corporation equipped with modern and state-of-art
healthcare facilities. It has a total workforce of 500 employees composed of 15 executives, 10
consultants, 20 managers, 50 supervisors, 25 technicians, 200 nurses and 180 clerical and
support staff. Most of these employees are college degree holders specializing in medical,
paramedical, business, and liberal arts fields.
Lea finished her undergraduate degree in human resource management with academic distinction
from a prestigious university five years ago and entered the hospital as HR assistant. After two
years of employment, she was promoted as HR specialist in recruitment. She is very excited
about my promotion and wants to enroll in the graduate school to take up a Master in Business
Administration with concentration in Hospital Administration. While as an HR assistant in the
same organization, she encountered several problems and complaints on compensation
administration like delayed salary adjustments, salary distortions, uncompetitive pay scale, and
poorly designed job analysis and job evaluation programs. She also noticed a high turnover rate
mostly from the technical and professional ranks which she suspected to be caused by poor
salary and poor benefit packages. She felt helpless and did not know what to do since her
manager was always busy with some labor relations issues. She also thought that the poor
economic conditions in her country coupled by a mediocre human resource management system
could be the culprit of these problems.
Now that she is in position to make some recommendations and influence management, she
thinks it is necessary for her to develop a plan for establishing a compensation system.
How will she start? What are the steps she will do to accomplish this plan?

To do:
Help Lea to formulate her plan and strategy to establish a compensation system.
Identify the factors she may consider during the process. Help her make a strategic
decision in handling human resource issues.
 AGBUS 1220- Human Resource Management

I think creating a strategy for implementing a compensation structure is essential

because compensation not only motivates workers, but it also serves as a reason to
hire new employees. No matter how much a person enjoys doing his or her work, at the
end of the day, practicality reigns supreme. Employers are still looking for a fair wage
and benefits package. Lea should recommend that they set aside budgets for salaries
only and another for benefits, so that all is in order and no employee grievances are
heard. She should ensure that wages are paid on time and without delay. Most
significantly, workers should be compensated appropriately for their positions and skills,
because one of the key reasons why workers quit is because they are underpaid. They
become unmotivated as a result of this. She should also recommend that there be
raises, bonuses, and other incentives to encourage workers to work harder and achieve
better results. It is important that it is well-managed and that the workers who work there
are well-cared for in terms of wages and benefits so that they can perform their duties
effectively and project a positive picture of the hospital. To keep their workers,
employers should pay them fairly and offer benefits that are too tempting to pass up.