The pressure for an organization to get it right is the key to competitive success. Companies now look to creative compensation strategies to create a environment that employees want to work for. Using point form, write a brief description of the organization, its employees, and its challenges. What is the organization’s domain? Fit stop is a new business concept developed by Susan Superset, who after a serious sports related injury, became aware of a market opportunity in the personal retail sports supply industry.
Susan with her undergraduate degrees in sinology and commerce, recognized that existing sport retailers marketed a limited range of fitness equipment and employed allegations with very limited knowledge of the equipment being sold and gave little or poor advice on what to buy and how to use it. Suntan’s, business plan is to operate and compete in the existing retail market domain of large retailers. The domain consists of sporting goods stores, mega store, discount and department stores all retailing some of the same equipment.
Its business objective is to sell all types of training, fitness, conditioning, and exercise equipment to the general public. Susan wants to start off with large stores creating a visible presence in the existing racetrack, competing along side other large retailers with similar products. Her goal is to breakout large stores in Ontario and branch into four provinces, her funding does not show a profit for a term of one or two years.
She wishes to compete by her organizations ability to meet and exceed the demands of consumers in the retail sports industry by providing personalized up to date training, conditioning advise, along with the latest and largest range of fitness and exercise equipment. The key strategy of the company is to be the most up to date and advanced supplier f new products and techniques. She believes this business strategy will set her business apart from the rest of the competitors in the retail sector and by providing information, education and personalized service to customers.
The employees will be knowledgeable and highly motivated. By employing a manager with a Bachelor of Commerce degree and employing a fulfillment sinology and physiotherapist, to consul clients and to train staff, she will need to hire full time sales staff with a minimum level of grade 12 education, to engage in the high level of training each staff member will require. Employees will need to process a strong concern for their customers, be innovative in developing solutions that fit their customer needs, and be continuous learners in the fitness industry.
Susan challenge includes a needs to develop a compensation system to realize her organizational goals of positioning herself in the existing similar market place. And by her ability to compete in up to date and advanced range of equipment, and to develop her key strategy of exceeding customer service expectations by personalized, knowledgeable, techniques, customer service to each individual customer. What should the goals be for their compensation system (that is, what does the organization want and what do they need employees to do)? (Hint: see p. 10. What two questions will have to be answered when deciding on a compensation strategy? Fit Stops goals for their compensation system is to promote the organizations growth firstly with their entrance into the existing marketplace and their plans for future growth. The compensation system must support its management structure for the achievement of those goals. The organization must attract and retain the individuals tit the attributes necessary for the tasks required. The organization through its managerial system must then support and guide the desired task behaviors for each individual in the organization.
The compensation system must comply with all laws in the Jurisdiction it operates and be seen as equitable for members of the organization. The organization must achieve these compensation goals in a cost effective manner. Fit Stops key strategy of competing in the market place is exceed customer expectations by providing personalized training advice, consultation, and top customer service. Suntan’s initial thought of compensation is to match what her competitors are doing. By matching the compensation systems of organizations, she will be operating in the same pool of applicants as her competitors.
Fit Stops challenge is to align its compensation system to its organizations strategy by firstly the ability to attract and retain and secondly to promote the desired employee behaviors’. Fit Stop needs to have fully engaged employees, to provide the personalized service that it provides to its customers. Their employees need to be highly motivated and knowledgeable with a strong concern for their customers. Employees must be flexible and innovative to developing solutions, and keeping up with the latest in fitness and training trends.
As trends develop they must also keep up and be motivated to learn and grow and operate as a team within the organization. Fit Stop must position it self as a organization that promotes the values of the latest in fitness technology and the employees will be seen as the dominate professionals in the fitness market. What do you think the employee needs are? Separate the needs into those that can be satisfied by extrinsic rewards and those that will be satisfied by intrinsic rewards. Fit Stop needs to develop an attractive compensation system to attract and retain the dynamic qualified individuals within a cost effective manner.
Initially the company does not see its profits for a year or two. To satisfy employee needs Fit Stop needs to establish a rewards strategy that includes both extrinsic and intrinsic rewards to meet the needs of its potential employees, and the plan through which they will be provided to present to potential employees, and to maintain the employee behaviors necessary for organizational success. Employees accepting a position with Fit Stop will first recognize the extrinsic rewards he company offers such as pay, general working conditions, coworkers and supervisory behavior.
Through the compensation system the organization can present the components of base pay, performance pay, and indirect pay to match or exceed in the market place. Base pay based on time worked is fair to the employee as time is exchanged for monetary exchange. Performance pay would relate to organizational performance and advancement, and indirect pay such as dental and health benefits. To enter into the market Fit Stop must meet employee expectations of matching the existing competition market domain of compensation strategy.
Intrinsic rewards such as growth and development, achievement, self esteem, that satisfy higher order human needs of employees will also factor in their decision to join the organization. This is were Fit Stop can exceed and provide high intrinsic rewards to their employees. Employees will receive many intrinsic rewards from the role they play in the company, the work they do and the same vision they share with other employees and the company. The value of information technology and advancement within the company will direct task behaviors and foster citizenship behaviors which can be valuable to organizational success.
Additionally the intrinsic rewards the company offers will place the organization in the position of attracting employees more easily, as employees have a high level of prestige and public esteem. Analyze the organization and identify the key aspects of the organizational context. (Hint: input, output, resources. ) What resources are necessary for the transformational process (I. E. , human, information, physical, financial)? Fit Stop is an business organization with an objective to supply consumers with all types of training, fitness conditioning and exercise equipment.
Managements role is o acquire the resources it needs to operate, combine and enact strategies to achieve the organizational goal of the company. The resources needed are human, the organizations employees, information, the technology and training needed, the physical, the retail location, and the financial, the budget the company operates with, these are the inputs in the organizational system. The resources management acquires and uses, creates the transformation and procedures used in the day to day operations of the business, sales, training, staffing, etc to create the outputs necessary to provide consumers with service and products.
Those outputs are transformed to resource providers in the form of revenue to the organization. The purpose of the organizational structure is to generate the behaviors necessary to carry out the organizations strategy. This organization system creates the revenue to the company to achieve its goals of organizational success in the market place. Discuss each of the contextual variables and how they will influence the organization. For example, what type of environment will the company operate in? What is the nature of the people who will be employed? What type of technology will be used?
What will be the size of the organization? Will the environment be stable or unstable, simple or complex, and what will that mean for the company? Managerial strategy determines the most appropriate reward strategy in an organization, so managerial strategy is determined by the contextual variables that affect the organization. These contextual variables are identified as environment, corporate strategy, technology, size of the organization, and the nature of the work force. Fit Stop will operate in a very stable environment of existing competitors, that mainly compete with price similar products .
Fit stop plans to operate with a more dynamic environment that will differentiate itself by the high level of service expertise of employees and new products that are new to the market for customer needs. This will influence the organization to adapt a high involvement management structure for the entrance into new products and service and to maintain the edge over the competition. Fit Stops corporate strategy will be classified as differentiator as defined by Porter, the company strategy will depend on providing unique up to date products and service in the fitness field to a broad range of customers.
This attempt to differentiate itself will be dependent on innovation, creativity, and flexibility and are best suited to the high involvement managerial strategy. The organizational size of Fit Stop is one of continued growth and expansion in to new market locations. This market differentiation may call for different managerial strategies to accommodate a different operating environment, maybe to meet legislative requirements. The organization may choose to segment the company’s operation, but will maintain the high involvement managerial strategy for the top management.
The nature of the work force requires the management of Fit Stop, the tore manager, the physiotherapist, seismologist will need to be well educated, highly skilled to educate motivate the sales team, and to monitor the performance of each individual in the organization. The management will high involvement as these positions will require a high level of decision making along with the broad responsibility expected of these individuals. Technology will be mediating as in Thompson typology, the sales staff will need to connect with clients and form relationships.
But also be non routine by Peppers definition in that they will need to be more dynamic to offer new ideas learned from training sessions to clients. Client solutions will depend on Judgments and intuition of the employee. Training learning sessions guided by management for sales staff is needed to pass on the informational technology. The sales staff and management will need to adopt high involvement strategies to be knowledgeable, committed, informed and flexible to realize the companies goals of differentiation in the marketplace. Discuss each of the six structural variables as they relate to this organization.
Six structural variables are needed to generate behaviors desired by the organization. Job design is the manner in which the total tasks of the organization is vided into separate tasks. Coordination and departmental the coordination of the work of individual employees in the organization. Decision and leadership structure how the decisions are made and the structure of the process. Communication and information structure that designates the amount and kinds of information , and the control structure the processes in place to control employee behavior. The rewards system determines how the compensation will be directed and measured.
These variables will relate to the organization as they will determine the framework of compensation and the benchmarks to deliver the compensation rewards. Fit stops Job design is broad, goal setting, flexible and requires the involvement of team work, which requires the coordination of horizontal and vertical departmental of staff and management, this is also seen in communication throughout the company. The control structure is mainly self control and internal, with employee commitment fostering intrinsic rewards. Decision making and leadership is democratic and participative, employees are engaged.
The reward system is highly intrinsic, rewards will be knowledge based, extrinsic rewards will be focused on group/organization performance, knowledge based, and may involve refit sharing or stock options. Which managerial strategy will work best for this organization and why? The three different managerial strategies are classical, human relations and high involvement. Classical assumes that most employees are lazy and dislike work but will be convinced to perform in order to satisfy their economic needs. The human relations assumes that employees dislike work but can be induced to work in order to satisfy their social needs.
High involvement assumes that work an be intrinsically motivating to employees if the organization is structured properly. Fit Stop plans to enter into a established market environment with some large organizations, a key strategy is to be the most up to date and advanced supplier of new products and techniques. I believe the high involvement management strategy will work the best for the organization as this strategy makes a major effort to create Jobs that are challenging and interesting and provide employees with autonomy over the planning and execution of work activity. Jobs are broader involve more elements.
Training and learning new technologies are emphasized and advancement is encouraged. Employees are encouraged to contribute to the success of the organization. Citizen ship behaviors are encouraged as positive work behaviors. Fit Stop will need to attract, encourage and retain employees for future company growth. Fit Stops key strategy is provide the most update fitness equipment and advice they will need to attract a high performance workforce, and they need to undergo a high level of training. There are two compensation strategies that the company could use. Choose one type of corporate strategy (e. G. Defender) and one type of competitive strategy (e. G. , focused low-cost producer) and describe why you think this is the best strategy for he organization to use. Fit Stop does have the option to develop two types of compensation strategies to be competitive in the chosen marketplace. Firstly the organization can choose to adopt the analyzer corporate strategy as it focuses on exploiting new opportunities while maintaining a base of traditional products and services Fit stop, have determined that they will maintain a firm base of similar products and services, that exist presently in the marketplace.
While exploiting new creative services and products to add to be more competitive. Thus fitting their key strategy to exploit new products ND exceed customer service expectations. They could maintain a hybrid organization structure wherein the sales staff is managed by human relations compensation structure and a high involvement management for new product development. The company can maintain a base of products and services and differentiate itself enough to identify new markets.
The other competitive strategy Fit Stop could adopt is the Differentiator corporate strategy in which is depends on providing unique products and services to a broad range of customers. Fit Stop has plans to excel in the marketplace by the addition of specialized equipment and raining, knowledgeable sales staff, personalized customer service and expert professional advice. Fit stop has high expectations for their employees and requires a high level of training.
They will be highly motivated, knowledgeable, and have a strong concern for their customers and be able to work in a team environment. Aside from personally helping customers the role of the physiotherapist and seismologist will be to train other employees in the use of equipment. The staff will initially receive general training but will be expected to learn as they will increase their knowledge of use and training procedures. Jobs will be interesting and challenging and employees will have control over their Job execution.
As the compensation strategy needs to address the desirable behaviors favorable to the organization. Membership behaviors, task behaviors, and citizenship behaviors can be fostered though the intrinsic rewards of the company. The competitive strategy will I believe command the growth for the organization the high involvement compensation strategy, to expand and create the growth predicted for the organization and to attract and retain the qualified and professional staff for the company,
Conclusion Susan Supersets concept of entering the existing marketplace is a great concept and will rely heavily on attracting an retaining the employees needed to position her company as a leader in the field of fitness. Her costs of retention will be high, her profits low and existing competition will step up to challenge her entry and mimic some of her ideas. Her key strategy will be to keep her employees engaged and loyal to the organization, fostering membership behavior, and to keep her compensation strategy competitive so that the company will become an employer of choice.