Solution to a Harvard Business School Case Study: How to design an effective compensation system? This term paper is an analysis of the Case Study "Marshall & Gordon: Designing an Effective Compensation System (A)" by HEIDI K. GARDNER and KERRY HERMAN.
Putting myself in the shoes of Kelly Browne, CEO of the PR agency Marshall & Gordon, I believe it is nearly impossible to design something like the „ideal compensation policy“ fitting everyone’s needs. However, I know that there are several recommended guidelines with fundamental properties for compensation systems that should be taken into serious consideration by executives while creating such systems.
A compensation system should consist of: a statement of overall objectives, the relative importance of compensation, general performance measures, competitive reference points, competitive positioning, internal equity and consistency, communication and involvement of employees, and governance.
As for the category of „involvement of employees“, Herzberg’s motivation theory stipulates that factors such as recognition, achievement, increased responsibility and opportunities to learn (within the company) are extremely important factors for employees, besides payments and benefits.
In the following case study I will attempt to analyse the current incentive system with respect to the given questions using numerous quotations.
Inhaltsverzeichnis (Table of Contents)
- Case Study M&G
- Challenges and Changes
- Goal Definition
- Current Compensation System
- Performance Measures
- Recommendations and Consequences
- Bibliography
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This case study analyzes the compensation system at Marshall & Gordon (M&G), a PR agency, highlighting the challenges and potential improvements. It aims to understand the current system's shortcomings and propose recommendations for a more effective and equitable approach.
- The impact of the current compensation system on employee motivation and performance.
- The need for a clear and transparent performance measurement system.
- The importance of aligning individual incentives with company objectives.
- The challenges of managing internal competition and rewarding both origination and execution of projects.
- The need for better communication and transparency regarding compensation policies.
Zusammenfassung der Kapitel (Chapter Summaries)
Case Study M&G: The first chapter introduces the case study and provides an overview of the current compensation system at M&G. It highlights the importance of a well-defined compensation system that aligns with company objectives and employee motivation.
Challenges and Changes: This chapter delves into the specific challenges faced by M&G's compensation system. It examines issues related to goal definition, the current system's structure, and performance measures, highlighting the lack of transparency, inconsistencies, and potential for abuse within the system.
Goal Definition: This section explores the absence of clearly defined objectives and thresholds within the M&G compensation system, emphasizing the need for a company-wide statement of overall goals.
Current Compensation System: This section analyzes the existing compensation system at M&G, outlining the challenges of rewarding both project origination and execution, the potential for internal conflicts, and the lack of clear criteria for bonus allocation.
Performance Measures: This section critiques the performance measures used at M&G, emphasizing the need for objective and transparent measures that ensure fair and consistent evaluations.
Schlüsselwörter (Keywords)
Compensation system, performance measures, employee motivation, project origination, project execution, internal equity, transparency, communication, motivation theory, benchmarking.
- Quote paper
- Dominik Ulrich Hoppe (Author), 2015, Analysis of "Marshall & Gordon. Designing an Effective Compensation System", Munich, GRIN Verlag, https://www.grin.com/document/300245
