Compensation in Canada the Current

Compensation in Canada

The current business community has drastically changed its approach of the market and has even modified parts of their operational processes, all to increase the efficiency of their activity. Two major such modifications revolve around an increased attention on the human resource and the complete satisfaction of the customers' needs and wants. The two features are interrelated in the meaning that the full satisfaction of customers' desires is only possible through the possession of highly skilled and motivated staff. In this particular sense, most companies implement a wide variety of human resource strategies, including special measures of designing the job, recruiting and selecting the employees, training, motivating, evaluating and finally remunerating them.

Employee compensation represents a power tool in the motivational process, but is also a requirement for all employers. It basically refers to the process of offering the workers a weekly or monthly wage in return for their work within the company. "Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction." Extensions to this process are represented by retirement and pension plans, along side with savings plan or the possibility to purchase corporate stocks. Pension plans are forms of letting the staff know that the company cares for their future financial security. All these increase the employee's loyalty and trust in the company, make him feel valued and cherished and eventually stimulate him to increase his performances, all to the overall benefit of the employer.

Just like in most countries of the globe, Canadian companies place an increased emphasis on their personnel and wish to present them with stimulating payroll plans. The state authorities have implemented a wide series of regulations that protect the rights of both employee and employer. Remuneration activities are supervised and regulated by the Association of Workers' Compensation Boards of Canada. The compensation rate for the employees activating in the Sporting Goods Industry for 2008 was of $2.22. The current estimations foresee that the pay to the employees will increase in the near future with an average of 3%, depending on the industry in which each employee activates.

Source: Wyatt, W., Compensation Trends in Canada, Watson Wyatt Data Services Canada

The Fit Stop is a new store that will open and activate in the sporting industry selling fitness equipment to a wide variety of customers. The store will also offer complementary services, most often materialized in specialized assistance with the purchase of the most suitable equipments that fit the unique needs of all customers, such as certain neck or back pains. The specialized consultancy will come from a physiotherapist and a bachelor in kinesiology and the idea came to founder Susan Superfit while she herself was suffering from pains related to sporting activities and when she would have needed such assistance. The store will be located in crowded malls as to ensure easy access to customers and it will be opened seven days a week (9 am to 9 pm Monday to Friday, 9 am to 6 pm on Saturday and 12 pm to 6 pm on Sunday). The success of the store will be based on the high quality of the equipments sold in great varieties, but most importantly on the quality of the services provided by the staff at the Fit Stop.

The employees will be offered training programs in relating to customers but also technical training as to get a clear understanding of the machineries sold and to be able to make informed recommendations to the customers. Given the long working hours and the quantity of information they will have to become accustomed with, the employees will have to be extremely motivated to increase their performances and sustain the company in reaching its overall goals. The owner however has limited knowledge on how to motivate and compensate the staff, and the primary thing to do is to conduct market research.

Market research is a vital starting point for any organization as it has two primary practical applications. First of all, it allows the store to identify and find means to serve the needs of customers, and secondly, it allows it to look at the strategies implemented by the competition. The identification of the strategies implemented by other stores in the sporting equipment industry sector is vital as to remain competitive in both terms of customer satisfaction but also employee compensation and retention.

When establishing the compensation basis for her employees, Susan Superfit has to consider the following three available pay systems:

Basic rate pay systems: ensure a pre-established payment per hour, week, month and so on to the employee, with no additional payments or remunerations

Basic rate pay schemes: these also have a fixed payment, but will supplementary reward the employee when his performances increase

Incentive schemes: these schemes are somewhat similar to the basic rate schemes, but different in the meaning that they do not reward based on performance, but are offered to increase and stimulate performance

These three systems are generally implemented separately based on the particular requirements and features of each organization and they all have advantages and disadvantages. In the case of the fixed payment, the employee is not motivated to increase his performances, but the company will not register increased expenditure with the staff. The pay schemes generate increased costs for the company but stimulate the employee to increase his performance; however, when the opportunity for reward no longer exists or when the employee can no longer increase his performance, the quality of his work would decrease. Finally, the incentive schemes generate additional costs for the store and require large amounts of time and energy into getting to know the employees, clearly analyzing their skills, capabilities and potentials; foremost, a new trend with incentive plans is that of customizing them based on the unique features of each individual - for instance, an employee might be motivated by an opportunity to promote to a managerial position whereas another could be motivated by a more flexible schedule.