Case Analysis – The Need for a Compensation Expert

Case Analysis – The Need for a Compensation Expert

Small organizations often do not need a compensation specialist since one staff member can perform the role adequately within the human resource structure. The HR personnel set the compensation structure and keep track of employees’ salaries. However, as a company grows, there is a need for a compensation expert who will manage employees’ benefits.  The same applies to EasySpa, which has kept an upward trajectory in staff numbers, customer numbers, and geographical presence. Expert compensation management will help EasySpa attract and retain the best talent while managing expenses.

A growing business like EasySpa needs a compensation expert since it lacks comprehensive compensation practices. A compensation expert will help them comply with market standards through research. There is no way EasySpa will compete favorably in attracting top employees if its salaries lag when compared to what competitive firms offer their employees (Maylett & Wride, 2017). The compensation expert will also liaise with the finance department to ensure salaries conform to the company’s budget limits.

Moreover, the counsel of a compensation expert is needed to prevent high employee turnover associated with poor compensation. Poor compensation is often cited as the primary cause of the high turnover rate. Notably, replacing a new employee costs 50% of their annual salary, while replacing the experienced and skilled ones may cost 250% of their yearly salary (Maylett & Wride, 2017). A compensation expert will help the company gather employee feedback relating to the compensation level to prevent unfavorable business conditions.

EasySpa will also need a compensation expert to transform its compensation decisions. From the case, the company lacks a data-driven compensation system, an expensive mistake for a company of its size. Other than considering mere headcount, an organization of EasySpa’s size should consider other compensation metrics, including annual pay raises, merit-based compensation, incentives, and additional bonuses (Forbes, 2020). No one is better suited to incorporate these factors into the company’s compensation system apart from a compensation expert.

References

Forbes, F. H. R. (2020, February 20). Council Post: 13 Techniques To Ensure Employees Feel Fairly Compensated. Forbes. https://www.forbes.com/sites/forbeshumanresourcescouncil/2020/02/20/13-techniques-to-ensure-employees-feel-fairly-compensated/?sh=560d7d19108e

Maylett, T., & Wride, M. (2017). The employee experience: How to attract talent, retain top performers, and drive results.

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Read the case study and provide a recommendation for hiring a compensation specialist that helps EasySpa’s Director of Human Resources, Jay Spento, convince his CEO of the benefits of hiring for this position. Be sure to follow APA guidelines and write your paper in the proper format (not as a question and answer).

The Need for a Compensation Expert

Supplemental Case

Chapter 1: Is it Time to Hire a Compensation Expert?

 Jay Spento is returning to his office after attending the grand opening of the 20^th location of EasySpa. As the Director of Human Resources at this growing chain of day spas, Jay has faced many challenges.  Opening this latest location took a significant amount of time for Jay and his staff, and they have fallen behind on some important projects. His staff has grown along with the company, and Jay believes now is the time to expand his staff by one more position. He now must prepare to meet with the company’s CEO to discuss his request to hire a compensation professional.

EasySpa is a specialty day spa that provides spa services at a reasonable cost. Each of its locations has a variety of employees, including nail technicians, hairdressers, masseuses, and receptionists. EasySpa also has a centralized appointment scheduling and customer service center. In ten years, the company has grown from 15 employees at one location to 396 employees at 20 locations. Continued growth is expected as the organization’s mission is to become the top-rated day spa in its region.

To support this growing organization, the human resources staff includes Jay, a Human Resources Generalist, a Recruiter, and an Administrative Assistant. The Recruiter handles all aspects of attracting and selecting new employees, and the Human Resource Generalist handles a variety of duties, including employee relations and training. Jay provides leadership to the team and works with upper management to set policies and procedures.  His duties are complex as they work with a diverse employee population in multiple locations. But, as EasySpa approaches 400 employees, Jay believes a compensation expert can help support the company’s growth plans.

Compensation management is a responsibility that has challenged Jay. While the company offers full employee benefits and Jay has done extensive market research to ensure they offer attractive pay, he knows there is much more work necessary to ensure that their compensation structure is effective and efficient. The company has no written job descriptions and does not have a formal pay structure.  Further, Jay relied upon an outside consultant to design their benefit package, and their benefit offerings have not changed since they were established ten years ago. Overall, Jay is convinced that a compensation professional would add significant value to the company. However, Jay must convince the CEO, who has little human resources expertise and is always resistant to hiring more staff positions, that the addition of staff is necessary.