Competitive Compensation Rates

A skill-based program will definitely help KFF manage the skills within their organization. In addition it will encourage KFF’s current staff to seek more skills and training. This approach will also assist KFF in attracting and retaining the right people for the jobs they offer and skill needed. With this program or approach KFF can take inventory on the skills they need to realize the new customer service growth strategy. Competitive Compensation Rates “Compensation structure should represent an organizations average pay level as it relates to competing with organizations within the industry or market.

“An organization with a policy of leading the market offers higher than the average wage of the relevant labor market, a policy of lagging the market signifies low-than-market average wages, and a policy of matching the market indicates wages at the relevant labor market average” (Brown, Sturman, Simmering, 2003, p. 753). Organizations that choose to pay above market wages or lead the industry have the financial resources to sustain this concept. They also attract top talent and are very competitive.

Organizations that choose to pay below the market or lag within their industry are very cost conscious, however they tend to offer more incentives to account for the lag. And those organizations that choose to match the market with wages are cost conscious, but offer other incentives that helps their competitive advantage. “Organizations with high pay levels should experience increases in both individual-level and organization-level efficiency because they are more able to attract, retain, and motivate the best performers” (Brown, Sturman, Simmering, 2006, p. 753).

Compensation structures can have both a positive and negative affect on performance, whether it is organization performance or individual employee performance. Because people are motivated by different incentives, it is important that organizations have a balance within their compensation structures and the incentives they offer. This will help to retain and motivate their people while also attracting top talent. When developing this compensation structure for KFF I took the critical steps of considering internal, external, individual and the strategic impact.

In addition, KFF also researched performance incentives, maximizing the use of their financial resources, and compliance with law and regulations as it relates to compensation. The following is a labor market analysis table that indicates the average salaries for the positions at KFF. The information involves salaries for those positions within the California area” (Thurman, 2010, p. 5). “KFF’s current compensation structure is competitive with the industry standards, it is not leading the industry nor is it below, and it matches the industry’s average and will continue to do so.

Their new strategy is aimed at increasing customer service while increasing revenues, being more efficient, and reducing costs. So in essence they want to do more with the resources they have, to do that KFF has connected their business strategy to their compensation structure. Being in the grocery industry in which the merchandise sells itself there is no reason for KFF to employ an incentive base compensation structure, instead they will continue to use a standard base pay program with some incentives and the implementation a merit program.

“A standard base pay program offers fixed salary ranges for each position type for employees performing the standard duties of their jobs” (Obringer, 2003, p. 1). KFF has set up a range with a minimum and maximum salary for each position; this will help to account for the different levels of skills and experience levels. Their pay levels will be competitive to mitigate the risk of losing top talent” (Thurman, 2010, p. 3-4). “KFF has three locations; LaJolla, DelMar, Encintas.

After research I found that their major competitors in those areas are Whole Food Market, Ralphs Grocery, Vons Grocery, and Trader Joes. These competitors are larger than KFF in every aspect of the business; more employees, stores, sales and revenue. The compensation rates of the Whole Foods, Ralph’s , and Von’s appear to be slightly above the industry averages (in the 60th percentile) in each position while Trader Joes compensation rates are within the 75th percentile of industry. KFF will continue to match the industry average at the 50th percentile.

“A pay-with-compensation policy tries to ensure that an organization’s wage costs are approximately equal to those of its product competitors and that its ability to attract applicants will be approximately equal to its labor market competitors” (Milkovich, 2005, p. 13)” (Thurman, 2010, p. 2). “KFF has considered the labor market, the scope of the positions within the organization, and the characteristics of their individual employees which has allowed them to determine their new and adequate compensation structure.

Their new compensation structure is adequate, fair, and competitive. The new structure has both internal and external equity. The following structure will allow KFF to attract talent, motivate current talent, and retain current talent without exhausting their financial resources. Performance Evaluation “Performance appraisals are essential to managing employee performance. It is a systematic, periodic, impartial rating of employee performance.

“An employee performance appraisal is a process often combining both written and oral elements whereby management evaluate and provides feedback on employee job performance, including steps to improve or redirect activities as needed” (Employee Performance Appraisal, 2009). Appraising employee performance is one of the most important responsibilities of manager. By effectively managing performance managers can correct deficient behavior, reward, and recognize becoming performance and behavior.

The single performance appraisal evaluation that will be used by Kudler Fine Foods to evaluate each level of their six critical positions is the behavior and result oriented appraisal. The following is the performance appraisal that will be used by KFF. This new appraisal is designed to fit KFF’s specific requirements. There are three levels of job classification; Leadership/Management level, Customer Service Frontline level, and Back-end operation. This one appraisal can be used to evaluate each of the six critical positions within the KFF organization” (Thurman, 2010, p. 7).