Employee Performance and Compensation

Employee Performance and Compensation

The employee compensation data shows that the air transportation company pays employees according to their functions. The lowest-paid employees work in the manufacturing department and earn $42,000. Low-level accountants receive $45,000-$48,000. Sales and research employees earn $55,000. On the other hand, logistics staff members receive $62,000. Next are the human resource and facilities staff, who earn $61,000. Web development and IT staff are the highest paid at $75,000. There is a uniform $2000 bonus applied across all departments. On the other hand, only a few employees receive overtime pay.

A few questions arise from the interpretation of the data. Firstly, why does the air transportation company only pay overtime to just a few of its employees? Another question from analyzing the data is whether the company bases its compensation structure on the number of years worked or educational qualifications. Also, it is not clear what individual rewards the company has put in place to motivate its employees.

Analysis

Quantitative and Qualitative Data

Quantitative data are the numbers that can be measured to produce quantitative results. In this case, quantitative data include salary, bonuses, and overtime payments. Also, the number of years the employees have worked for the company also forms part of the quantitative data (Nyberg et al., 2016). There is a sharp difference between what the highest earner and lowest earners receive. Whereas managers earn $237,000, junior employees in the manufacturing department earn a paltry $45,000.  On the other hand, the company does not base its salaries on the number of years one has worked. Employees who joined them in 1987 earn the same as what employees who joined them in 1997 earn.

Qualitative Data

Qualitative data involves employee actions that are observed but not measured. HR officials observe employees’ work habits and behaviors and record them. HR managers use the data to determine important aspects regarding recruitment.

One of the qualitative data captured by the air transportation company is the employee experience. One’s experience provides insights into their competency and is sometimes used to determine compensation (Nyberg et al., 2016). Most companies prefer employees with 10-20 years of working experience, especially for top-level managerial positions. All top-level managers working at the air transport company joined them in 1987, implying that they have many years of working experience. They are also paid according to their many years of work experience. Experienced employees are less likely to require training, thus saving the company training costs.

Another form of qualitative employee information that can determine their pay is their potential. Firms compensate employees, especially the young ones, based on their performance potential (Publisher, 2016). That mostly applies to those who specialize in highly rated industries such as IT. For the air transportation company, employees are also rated based on their potential. According to HR managers, some are trying hard, while others need the motivation to improve their performance.

Pay differences based on seniority are also evident in air transportation companies. Naturally, senior employees demand more pay than freshly recruited employees (Publisher, 2016). Most companies are willing to pay senior-most employees fat cheques because they bring the much-needed experience to run the organization.

What the Data is not Telling

The data fails to mention other critical information about employees that companies use to determine employee compensation. Such information includes personal details about employees. For instance, there is no mention of employees’ location, which determines an employee’s cost of living (Tarpey, 2018). The cost of living varies from one place to another. Employees who live in urban areas pay more rent than their counterparts in rural areas.

Additional Primary and Secondary Sources

Primary sources of HR data refer to the sources that a company creates. For instance, a company website provides important information regarding the position of a company. For instance, a website’s ‘About us’ segment provides information about key officers, executives, and performance. Also, the human resource segment of organizational websites provides important information about employees’ employment contracts.

On the other hand, secondary sources refer to sources created by other parties apart from the company. Some of the secondary sources include interview transcripts, journal articles, and press releases. Secondary sources are authored by other parties other than the organization but contain important data about the organization.

Conclusion and Related Outcomes

Implementing a 10% budget cut on HR costs is necessary to cater to the reduced company revenue. The first step should be to look at the salary discrepancies among all employees. Some staff in the lower cadres, like manufacturing employees, are paid way less than ranking employees in senior posts. It would be appropriate to conduct a performance assessment and slash pay for some high earners who are non-performers. It will not be appropriate to effect a payment among poorly paid employees.

The basis for the decision is the reinforcement theory. The reinforcement theory posits that high-performers should be compensated well while non-performers should be penalized. Rewarding high performance will encourage employees to put in the necessary efforts to improve performance.

References

Nyberg, A. J., Pieper, J. R., & Trevor, C. O. (2016). Pay-for-Performance’s Effect on Future Employee Performance. Journal of Management, 42(7), 1753–1783. https://doi.org/10.1177/0149206313515520

Publisher, A. removed at the request of the original. (2016, March 22). 6.3 Types of Pay Systems. Open.lib.umn.edu; University of Minnesota Libraries Publishing edition, 2016. This edition is adapted from a work originally produced in 2011 by a publisher who has requested that it not receive attribution. https://open.lib.umn.edu/humanresourcemanagement/chapter/6-3-types-of-pay-systems/

Tarpey, M. (2018, September 5). 6 Essential Factors for Determining Compensation. Careerbuilder.com; 6 Essential Factors for Determining Compensation. https://resources.careerbuilder.com/recruiting-solutions/how-to-build-employee-compensation-programs

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Step 1: Download and Review the Data
Download and review quantitative and qualitative data on employee salaries, overtime pay, and performance. This is the data you will interpret and analyze for your report.

Using Excel functionality, you can find the answers to questions such as:
 How much does the company spend on salaries, overtime, and bonuses overall?
 Which departments have the highest employee expenses in total, and which departments have the highest average employee pay?
 How long have employees been with the company on average, and how does that vary by department?
 How does performance vary across employees and departments?
 Do salaries seem to be tied to performance, experience, or length of employment? What about bonuses?
 How much money does the company need to save in order to reduce its costs by 10 percent?

Step 2: Interpret the Data
Based on your examination of the employee performance data, you will begin your report by describing what you see in it. Provide a general overview of the data and explain what it tells you about the company’s human resources.

Describe the quantitative and qualitative data provided in the spreadsheet. What kinds of information are you able to gather using the data provided?

Explain what you can determine about the company’s employees from the spreadsheet. What story does the data tell you?

What questions emerged from your interpretation of the data?

Step 3: Analyze the Data
For the analysis section of the report, you will explain how the provided data helps you understand your employees and how the company is using its financial resources. You will also identify potential gaps or issues in the data.

Step 4: Draw Conclusions
For the conclusion of the report, you will discuss a strategy for reducing company costs by 10 percent and explain how you have used data to reach this decision.