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Compensation Case Study


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This was a Case Study presentation that I worked on for an HR Generalist class.

Published in: Business, Economy & Finance
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Compensation Case Study

  1. 1. Bank West Corporation Candis Tweeddale and Ken Aitchison
  2. 2. Contents <ul><li>Facts </li></ul><ul><li>What strategies would we propose </li></ul><ul><li>How would we make the compensation system fairer, commutative and a drive change? </li></ul><ul><li>Would we change the company’s philosophy to do the right thing for the shareholders? </li></ul><ul><li>Summary </li></ul>
  3. 3. Facts: - <ul><li>Bank of the West </li></ul><ul><ul><li>The merger of the Bank of the West and 1 st Hawaiian created BancWest the 10 th largest bank holding company in the U.S. </li></ul></ul><ul><ul><li>BancWest’s holding company is a wholly owned subsidiary of French bank BNP Paribas </li></ul></ul><ul><li>Compensation Philosophy (during and immediately after merger) </li></ul><ul><ul><li>No direct linage between performance and compensation </li></ul></ul><ul><ul><li>Focused on retaining key employees </li></ul></ul>
  4. 4. Facts (cont’d) <ul><li>Adjusted Compensation Philosophy </li></ul><ul><ul><li>Less entitlement based </li></ul></ul><ul><ul><li>Tied more closely to how well the company and individual employee’s perform </li></ul></ul><ul><ul><li>Leanest, best performing company </li></ul></ul><ul><ul><li>Competitive base pay, performance-based compensation </li></ul></ul><ul><ul><ul><li>Targeted to the top quartile of the market </li></ul></ul></ul>
  5. 5. What strategies would we propose? <ul><li>Targeting salaries at top quartile of the market </li></ul><ul><ul><li>If overall compensation for your employees is in the top quartile in your industry what does that get you? </li></ul></ul><ul><ul><ul><li>Strong incentive for employees who will want to retain their high-paying job </li></ul></ul></ul><ul><ul><ul><li>They are more likely to provide greater work effort </li></ul></ul></ul><ul><ul><ul><li>Higher wage makes job loss more costly to employee </li></ul></ul></ul><ul><ul><ul><li>Above market wage can enhance employee productivity, so that higher wage could pay for itself </li></ul></ul></ul><ul><ul><ul><li>Lower supervision costs: with less incentive among employees to “lay down on the job” , the company would need fewer supervisory personnel to monitor employee performance. This too can lower the company’s overall wage cost. </li></ul></ul></ul>
  6. 6. What strategies would we propose? <ul><li>Reduced job turnover: the above market pay discourages workers from voluntarily leaving their jobs. The lower turnover rate reduces the company’s costs of hiring and training workers. It also gives the company a more experienced, more productive work force. </li></ul><ul><li>A strategy that calls for above market pay can contribute to the feeling in the organization that it is an elite organization, that people must be competent to work there, and that they are indeed fortunate to be there. </li></ul>
  7. 7. What strategies would we propose? <ul><li>Hiring quality workers, demanding “ above market ” performance </li></ul><ul><ul><li>Hire slow, fire fast </li></ul></ul><ul><ul><li>“ We will hire five people to do the work of 10 and pay them like seven”, communicates an above market pay practice closely tied to demanding performance standards. </li></ul></ul><ul><ul><li>Develop culture to go along with compensation philosophy </li></ul></ul><ul><ul><ul><li>David Brandon, CEO of Domino's </li></ul></ul></ul><ul><ul><ul><ul><li>“ You can’t overcome a bad culture by paying people a few bucks more” </li></ul></ul></ul></ul><ul><ul><li>Ensure Job Descriptions, Job and Performance Expectations are understood and communicated up and down the organization. </li></ul></ul>
  8. 8. How would you make the compensation system fairer, commutative, and a drive change? <ul><li>Get input and assessment into the strategy from various sources when setting up the design of the compensation plan </li></ul><ul><ul><li>Employee input and Preferences </li></ul></ul><ul><ul><li>Strategic Business and Operating Inputs </li></ul></ul><ul><ul><li>Industry & Labor Market Practices and Trends </li></ul></ul>
  9. 9. How would you make the compensation system fairer, commutative, and a drive change. <ul><li>By following this input/assessment process the company will: </li></ul><ul><ul><li>Get easier buy in and agreement from employees </li></ul></ul><ul><ul><li>Make sure management concerns are addressed </li></ul></ul><ul><ul><li>Market trends are not ignored </li></ul></ul><ul><li>Communicate, Communicate, Communicate </li></ul><ul><li>Follow Through </li></ul>
  10. 10. Would you change the company’s philosophy to do the right thing for the shareholders? <ul><li>Short Term vs. Long Term </li></ul><ul><li>Balance between the business and shareholders interests </li></ul>
  11. 11. Summary <ul><li>When involved in a merger figure out what your compensation philosophy during all stages of the merger. </li></ul><ul><li>Make sure it is communicated up and down the organization </li></ul><ul><li>Make sure the company culture supports the compensation philosophy. </li></ul><ul><li>Use various resources to help design the compensation strategy and plans. </li></ul><ul><li>Follow through </li></ul>