AGBUS 1220- Human Resource Management

Name: Rianne Caile B. Santos

Course/Section BSAB 1-1
:

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 are 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 field.
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 I
promotion and wants to enroll in the graduate school to take up Master in Business
Administration with concentration in Hospital Administration. While among 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 form 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 mediocre human resource management system
could be culprit of these problem.
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.
Compensation strategies describe how an organization views and handle
employee pay and benefits. The plan acts as a roadmap that can be documented in a
written form that explains how the company handles employee benefits. In establishing
 AGBUS 1220- Human Resource Management

an effective compensation system, Lea must first consider the budget allocation as it will
help determine how much of the total compensation will be set aside on salary and
percentage that will be allocated for the benefits and other incentives that will help aid
the management of labor, health-care, and other non-essential benefit costs.
Secondly, Leah should consider developing salary ranges as one of her factors
during the process as this is important to ensure employee pay is competitive with other
organizations. Salary ranges can be developed through researching sites that are both
reasonable and justifiable to determine the specific salaries in her area. It is important to
analyze all workers to decide what work is performed, how the task is classified, and
pay levels that correspond to all job descriptions.
In line with this, she can also perform a job evaluation program that can be done
monthly, quarterly, and annually based on each role’s key performance indicators. The
key performance indicators should be based on the effectiveness and efficiency outputs
of the workers. To identify whether the workers are meeting the job expectations, the
target for each success measure should be met. Workers can be ranked based on the
overall combined KPI scores. This data is highly recommended for an annual
performance appraisal program. It indicates quantitative and qualitative references to
identify how much increase should be awarded for deserving workers.
Wage distortion refers to the absence or near-disappearance of salary
differentials between lower and higher positions in an organization as a result of wage
order enforcement. Any conflict resulting from pay distortions must be settled by a
collective bargaining agreement's appeal process, and if it fails, by voluntary arbitration.
A lot of organizations provide benefit packages in addition to their salary to
attract, motivate, and retain employees. Since she is working in a hospital, the area she
is working in should be her choice to provide the health care benefits such as
preventative medical insurance is available to all qualified workers, as well as eye care
for infants. Leah should focus the financial bonuses on rewarding workers who meet
their objectives, such as a generous boost for reaching higher ranks in the market. The
main goal of this factor is to be competitive in terms of insurance, pensions, tuition
compensation, and other incentives because they know that it will make or break a
career candidate's decision to take a position with a company, or an employee's
decision to leave.
Leah can also consider structuring a performance management process to
ensure staff are meeting organizational expectations and are monitored on a regular
basis. This may be time-consuming and discouraging but this can help identify
employee developmental opportunities, encourage staff through a positive performance
appraisal, and allows employees who are motivated to continuously grow through a
structured process of coaching and mentoring employees, development, and a plan for
growth. Compensation strategies may have a positive impact on employee retention
and efficiency.
 AGBUS 1220- Human Resource Management

It is essential to verify if the hospital is incorporating with the legal requirements

as well as with the DOLE’s law about compensation such as minimum wage, overtime
pay, special and regular holiday pays, and night shift differential. This aim is to remove
natural prejudices in recruiting decisions while still complying with the DOLE’s law.
Lastly, a structured administration is the most essential where it should consist a
development of annual review process, salary audit, raise process timeline, and making
sure that someone is responsible for all compensation areas. A thorough pay plan will
serve as the basis for building an environment that respects and promotes employee
achievement while also fostering a positive employee engagement culture.