The final outcome of the project will be an overall compensation program for an organization including both direct and indirect compensation.  For purposes of this project, you are the Compensation Director of the organization. 

The Organization:

For purposes of this project, you will use a fictitious organization but will provide details about the organization as listed in the “Plan Guidelines” outlined here.  Assume that the organization is two (2) years old and currently has seventy (70) employees.  The organization is in a growth stage and plans on expanding.  Within the next year, the staffing plan calls for as many as 200 total employees.

Make any assumptions you need to about the organization; for example, you will need to decide the industry, the company philosophy, the mission/vision, the top management leadership style, the location, the demographics.  You may have other assumptions you want to make about the organization.  The assumptions you make are critical—remember, your compensation plan should be aligned with the organization’s strategies.  It should be designed in a way that solves business problems (or prevents potential problems) for the organization.   Part of the evaluation of your plan will focus on how well the plan aligns with the organization’s strategies and how creative you are in solving current and potential business problems.

Plan Guidelines:

Your written plan will use the guidelines outlined here.  Your plan will include the following components:

• Title Page – Gives the title of the project and the name of the student who prepared the project.
• Table of Contents – Details the location (page number) of each element of the plan.
• Background of the Company – Give a description of the organization here.  This description should include the following details of the organization:  the industry, the company location, the competition, company demographics, company vision/mission, leadership style and philosophy, location demographics, future growth outlook (beyond the next year). 
• Identification of Current and Potential Business Problems – In this section you will identify any current business problems the organization is facing and anticipate any future problems.  One way to approach this part of the plan is through a SWOT analysis; identify the organization’s strengths and weakness (internal) and its opportunities and threats (external).  This approach would incorporate any environmental issues such as increasing competition for employees, changing demographics, and changing technology. 
• Overall Compensation Strategy – In this section you will give the overall strategy of your organization—do you want to lead, match, or lag the industry?  The geographic area?  Why did you choose this particular strategy?  Describe any key problems that you identified in the previous section that you will solve through the compensation plan.  Although this section will certainly not be the largest part of the plan, it is very critical in establishing a foundation for the entire plan.
• Basic Job Descriptions – This part gives an overview of the basic types of jobs in your organization and includes your rationale for any specific requirements for jobs (e.g. special educational requirements).  The actual job descriptions for the basic jobs should be included in the Appendix of your plan.
• Benefits – This part should address the benefits package.  Describe what it will look like and what is included.  You should also address how you will afford to pay for these benefits; e.g. will you share costs with employees?  If so, how will the costs be allotted between the organization and employees?
• Performance Management System – This part describes your performance management system.  You should include a description of the process from goal setting to feedback.  Discuss how results will be measured and determined.  Also, discuss how compensation will be linked to performance.  Some areas to consider are how frequently employees will get raises, how the raises will be determined, if the organization will use a merit system, etc.
• Administrative Policies – This part gives some guidelines on administering the compensation program.  Consider how often you will review and update the plan.  Discuss how you will communicate your overall compensation plan to employees and how you will train supervisors and employees.  Also, consider how you will monitor the plan; e.g. will you use compare ratios or review and approve pay, etc.

• Direct Compensation Program – This part is the “meat” of your plan.  You should describe the compensation program for each employee group; discuss your rationale for each group.  For example, discuss if management and/or exempt pay designed differently with bonuses, etc.  You do not have to make this part extremely complicated; however, your design should fit the assumptions you made about the organization, the philosophy, what you want to pay for (experience, training, results, combination, etc.), and how you want to motivate people.  Consider if you have any type of “at risk” money how you will determine the bonuses—what percent will be based on individual performance vs. company performance.  Also, be sure to consider differentials for supervisory vs. non-supervisory positions as well as for various shifts.  This section should also include a Pay Structure and the assumptions/parameters you used to differentiate the various levels.  Be sure to include the actual pay structure document in the Appendix of your plan.