Competitive Advantage of an ABC Retail Firm

Academic Paper, 2018

6 Pages, Grade: 95.4%



Notably, once it comes to employees’ payment, Human Resource managers face an intriguing challenge; the challenge of offering competitive salaries so as to attract qualified talent alongside retaining it, without harming the bottom line. Luckily, the competitive pay practice (a common-sense way of setting salaries), has been observed to be an easy process that is quite imperative in any business. The development of any competitive pay policy requires reviewing of the firm’s inside job descriptions along with their respective salaries; then comparing them to analogous positions of different organizations. In this sense, the employer may determine what he/she would be paying his/her workers by obtaining salary data from other organizations or even from public sources.

Therefore, as the ABC Retail HR manager, which is an independent retail firm, I will develop a competitive pay policy for ABC Retail Company that will sustain the company’s strategic goal of increasing its market share to 20% by 2019 in the St. Louis area. It is significant to note that according to a 2015 survey, the market share of this company in St. Louis area was 17.8%, facing a stiff competition from Target and Kohls. ABC Retail has ten stores, with each store comprising of one store manager, 3 assistant store managers, 15 department managers, 20 shift leaders, 150 associates, not to mention that each store contains a total of 149 employees when fully staffed.

The Current Competitive Pay Policy of ABC Retail

Currently, the competitive approach of ABC Retail may be described as an incomplete pay strategy. Even though ABC Retail remains to be one of the successful businesses that have inevitably achieved many things in St. Louis, it has not gone far enough in its pay offering, an aspect that remains to be one of the daunting challenges for the company’s future prospects. For instance, the firm has a well-thought-out salary structure, a solid annual incentive plan and a robust benefits package, but it lacks means of sharing long-term value with its creators. In addition, even though this firm has a plan that aimed at rewarding a sustained performance, it is evident that its 401 (k) fails to let the well-compensated employees suspend as much income or earnings as they would like to. Consequently, these individuals are being hit hard by taxes, an issue that highly diminishes their ability to build wealth. Therefore, ABC Retail’s competitive policy has to be a complete pay strategy that has the following parts: a value-centred salary structure, balanced value-sharing, a flexible and comprehensive benefits package, and executive benefits.

Value-Centred Salary Structure

Despite the fact that ABC Retail has by and large tied its salary levels to market pay, especially that of Target and Kohl’s, it is high time the company embraced the idea of looking at market data in making survey evaluations. Conversely, our firm ought not to completely depend on such surveys in building our salary structure as research has it that most companies have run into trouble after such complete dependence. Again, this firm has to highly emphasize on the combination of creating value and internal equity. Thus, if this is applied, salaries which contain a direct effect on this firm’s performance or even that of the department, and which are tied to duties and stewardship, will be defined and adjusted based on the employees’ creation of value or maybe should be able to impact.

Concerning internal equity, ABC Retail has to acknowledge all the positions ranging from the store manager to the employees. Acknowledgement of any position has to be presented on the basis of an individual’s position impact on value creation, together with its opportunity relative to the other positions, but not only relying on what market data portrays the worthiness of that particular role.

As a result, for this company (ABC Retail) to attain its set ambition of increasing its market share to 20% by 2019 in the St. Louis area, it has to employ a hybrid salary framework since this salary construct allows for a broad elasticity inside a pay hierarchy that is progressive by blending the traditional approach and that of broadband. The current ABC Retail’s traditional approach (minimum, midpoint and maximum) where, each level determines eligibility as well as targets, an issue that may be demoralizing. Thus, when these features are blended with those of the broadband structure, where positions are categorized within a few wider ranges so as to allow for maximum pay decisions’ discretion, our firm will automatically reach its goals.

Balanced Value-Sharing

Subtly, balanced value-sharing has been observed to be a significant aspect in competitive pay policy as it deals with the manner through which one applies pay in reinforcing the significance of preserving the revenue engine of the business while at the same time focusing on development (Milkovich et al. 2011). In this sense, ABC Retail will apply this phenomenon in a manner that helps its employees to attain their goals of building wealth as the company’s also shareholders pursue their goals. Since the current compensation strategy of ABC Retail mainly rewards only one or another; short-term or long-term performance, our employees will probably have only half of the focus the company wants them to have.

Therefore, in accordance with the aforementioned context, the pay policy that is to be taken by ABC Retail has to emphasize both priorities, not to mention that it has to assist the firm in sustaining a form of performance equilibrium. In this sense, all the value-sharing participants will be allowed to enjoy substantial income ability by being entirely associated with the strategic goals of growth of ABC Retail.

Despite the fact that there may be no silver bullet that can be used to hit the exact correct balance between long-term and short-term rewards in ABC Retail, it remains highly critical to follow the following guidelines. One of these guidelines as agreed by several scholars and economists is that any short-term value-sharing has to reward the thriving maintenance of the revenue engine of the company in question (Milkovich et al. 2011). In this respect, for ABC Retail to succeed in its strategic goals, it has to use a reward system that has the ability to reinforce the implementation of the business model, through monitoring the leverage points that have high impacts on the growth trajectory of the firm. To make this possible, the firm’s competitive pay policy has to contain clear guidelines that define roles and responsibilities, expectations as well as outcomes of the company’s positions.

Research has it that all high performers will feel empowered by this method as it gives them a range of control over their yearly income dependent on their aptitude to impact value-creation (Hirsch & Shotts, 2015). Again, these performers perceive this pay component as a way of maintaining the living standards that they feel they have acquired at this phase of their profession as they also build wealth. Most importantly, if ABC Retail ties value-sharing to roles/responsibilities, outcomes along with expectations, this business will be able to provide income opportunities that are superior even without putting our shareholders at risk. Notably, this is actually possible because this form of approach endorses accountability since every individual share only on the value he or she has created (Bénabou & Tirole, 2016).


Excerpt out of 6 pages


Competitive Advantage of an ABC Retail Firm
Kenyatta University
Business Management
Catalog Number
ISBN (eBook)
File size
468 KB
Advantage, Competition, Firm, Retail, Business, Salary, Money
Quote paper
Business Administrator Mutinda Jackson (Author), 2018, Competitive Advantage of an ABC Retail Firm, Munich, GRIN Verlag,


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