Management and Compensation Strategies

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Compensation Strategies

Leadership is an essential aspect needed by organizations during the modern period when the competition is high. To outsmart rivalry and win a higher market share, companies often engage in various activities. Some of the areas that managers focus on as they strive to increase motivation and productivity in workplaces include equipment, employees, and customer relationship. When supervisors improve the quality of equipment, develop smart remuneration programs, and work on customer satisfaction, they are likely to increase their market share. Employee remuneration is critical in present-day firm operations.

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Historically, organizations’ leaders believed that human resources did not significantly determine the company’s progress. However, contemporary leaders understand that practical remuneration strategies improve productivity and enhance client satisfaction. It is against such a backdrop that the essay examines various compensation strategies used by modern managers. The report utilizes a travel agency to analyze these strategies effectively.

Equal Employment Opportunity Laws and Their Impact on Compensation Strategies

Equal employment opportunity (EEO) laws can dictate compensation strategies adopted by companies. In the travel agency, these laws will help me choose and implement the appropriate techniques. These policies cushion employees from discrimination by the executive. Some of the areas addressed by EEO include sex, race, and religion. The United States government has enacted various laws in line with equal employment and compensation. Society for the Human Resource Management (SHRM) (2020) explains that some EEO policies include “The Equal Pay Act of 1963,” “Title VII of the Civil Rights Act of 1964,” “Age Discrimination in Employment Act of 1967,” and “Immigration Reform and Control Act of 1986.” The outlined laws compel managers to ensure that the workplace is favorable for all human resources irrespective of age, sex, race, and religion. These guidelines dictate the strategies I chose when developing compensation programs for employees serving in the travel agency. With such policies, I can create practical plans that improve motivation among all company staff members.

Advantages and Disadvantages of Pay-Per-Performance and Competence-Based Pay

In modern times, managers often use the techniques outlined above to remunerate their human resources. Wang et al. (2018) assert that pay-for-performance focuses on the employee’s ability to deliver according to company expectations. On the other hand, competence-based pay investigates how staff members utilize their skills. The two strategies have various benefits and drawbacks which interfere with their implementation. The advantages of the two programs include motivation, improved performance, and equity in workplaces. When employees realize that the management pays them based on performance or competence, they work hard and meet the expectations. Financial reward is often a motivator that challenges human resources to deliver their best. The desire to work hard translates into improved performance and higher productivity. These programs also help employees exercise equity because they focus on employee performance and competencies.

Some prominent disadvantages associated with the highlighted styles include subjectivity and favoritism. Competence-based pay and pay-for-performance often look discriminative, especially among individuals serving in senior positions (Ren, 2017). It is easy for the company to analyze the performance of roles such as sales. When companies provide the target sales, individuals may work hard and meet the target. The assessment of employee action is easy. However, managerial roles are often difficult to quantify. Another issue associated with the two compensation programs is favoritism. Some staff members may think that the organization does not treat them like their counterparts in the workplace. Besides, these programs can easily result in prejudice from the management.

The Proposed Package

Notably, for the successful execution of activities in the travel agency, it is significant to combine the two compensation strategies. The blend helps me address challenges such as subjectivity and improve productivity in the workplace. Employees serving in managerial positions will receive their pay based on competence. Subsequently, subordinates will get their remuneration following a careful analysis of performance or competencies. With such a combination, the agency will enjoy high productivity and motivation from its workforce. These components are central to the attainment of client loyalty. The chosen programs are competitive owing to their cornerstones, which hinge on performance and competence. As such, they apply to employees from all age groups and gender.

Another significant feature in the package is the inclusion of direct and indirect benefits. I will strive to introduce additional gains in the travel agency that match those offered by competing agencies. Insurance plans, retirement savings, and on-the-job training comprise the agency’s indirect benefits to the workforce. These non-monetary rewards will be instrumental in improving the quality of services delivered by employees to our new and existing customers.

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Application of Motivation Theories in the Chosen Compensation Strategies

Some theories that resonate well with pay-for-performance and competence-based pay include Skinner’s reinforcement theory and Locke’s goal-setting theory. The reinforcement theory advanced by Frederic Skinner revolves around the modification of individual character in a particular direction. Asadullah et al. (2019) explain that according to Skinner, mentors reinforce specific behaviors to encourage individuals to repeat the exemplary conduct. In workplaces, financial rewards and promotions based on competence and performance serve as reinforcements, which motivate the employees to work hard.

On the other hand, John Locke uses his goal-setting theory to justify that when companies set realistic goals, they attain worker motivation. In Locke’s argument, staff members enjoy working in firms that define their goals. The relevance of the model in employee compensation takes effect due to the connection between performance, competence, and increased workplace enthusiasm. Targets set by companies serve as goals that encourage individuals to work hard and deliver their best. Therefore, the theories outlined above can easily factor into the discussion on compensation strategies that I select for the travel agency under review.


Asadullah, A., Juhdi, N. B., Islam, M. N., Ahmed, A. A. A., & Abdullah, A. (2019). The effect of reinforcement and punishment on employee performance. ABC Journal of Advanced Research, 8(2), 47–58. Web.

Ren, T., Fang, R., & Yang, Z. (2017). The impact of pay-for-performance perception and pay level satisfaction on employee work attitudes and extra-role behaviors. Journal of Chinese Human Resource Management, 8(2), 94–113.

Society for Human Resource Management. (2020). Managing equal employment opportunity. Web.

Wang, T., Thornhill, S., & Zhao, B. (2018). Pay‐for‐performance, employee participation, and SME performance. Journal of Small Business Management, 56(3), 412–434. Web.


Legally Mandated Benefits Direct Benefits Indirect Benefits
  • Insurance policies
  • Medical cover
  • Retirement plan
  • Salary
  • Employee salaries ($65,000 for mid-managers and $37,000 for subordinates) commissions, tips, and bonuses (around $100 per day)
  • Insurance policies
  • Retirement plan
  • Work from home
  • Flexible working schedule
  • 401k plan

In line with the United States’ federal law, I will adhere to the minimum wage policy. In Miami, Florida, the minimum wage is at $8.56 per hour. Therefore, I will ensure that employees in the agency receive an hourly wage of $9. Equally, I will pay mid-level managers a monthly salary of $65,000 annually. A pay of $61,000 to $70,000 will be the high range, while that of $51,000 to $60,000 will be on the medium range. The lowest pay range will be $41,000 to $50,000. Using the program, I will undertake an annual evaluation of employee productivity compared to the current performance. A rise in service delivery implies that the program is viable.

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"Management and Compensation Strategies." BusinessEssay, 27 Nov. 2022,


BusinessEssay. (2022) 'Management and Compensation Strategies'. 27 November.


BusinessEssay. 2022. "Management and Compensation Strategies." November 27, 2022.

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BusinessEssay. "Management and Compensation Strategies." November 27, 2022.