Plant Reorganization The compensation system (including p

The compensation system (including pay and benefits) at BEP is in need of adjustment, but the entire plant organization should be considered in light of its ability to help the company as a whole compete in the market. Innovative when it opened, the plant now places its emphasis on meeting quotas which result in high levels of inventory and in not responding to market demand. Implementing a just in time (JIT) inventory and production system can help the plant maintain a high level of productivity while reducing inventory carrying costs, and may enable the plant to reduce its operating costs and use fewer shifts. The plant may also want to rethink its team approach to organization and implement a more traditional hierarchy. However, the compensation and benefits of the plant are the main focus of this analysis as both contribute significantly to the plant's competitive position.

Compensation Analysis of Competitive Position - Analysis

From a compensation standpoint, the BEP plant has positioned itself in a leadership position relative to the local competition. Due to its desire to maintain parity with Chicago employees, non-exempt compensation is in the 90th percentile for the Baltimore area, which means that BEP employees would have difficulty moving to another local employer while maintaining the wages to which they have become accustomed.

However, the same is not true at the exempt level. Initially, BEP used a three-tiered pay program for their exempt

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e. At the exempt level, the fact that 12 of the 15 managers who left went to other positions within the company indicates that the exempt pay structure is not effective. Managers should be rewarded based on the productivity of their sections, and quality should also be made one of the parameters to be considered in increases. The eight-level structure offers greater flexibility than the three-level structure, but managers may be attracted to other positions in the organization without additional benefits at BEP. Compensation Analysis of Competitive Position - Prognosis The dissatisfaction with the compensation programs at BEP is likely to manifest itself in two distinct ways if there are not changes implemented soon. Exempt employees are likely to seek positions elsewhere within the company since they are more able than non-exempt employees to make a geographic move in order to facilitate this. Evidence of this can already be seen. Non-exempt employees would typically move to comparable jobs within the same geographic region, but that may be difficult since these employees are already making more money than most of their counterparts outside the organization. Because of this, employee morale is likely to suffer with the r

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