BUS FPX 4043 Assessment 1 Creating a Compensation Philosophy

Student Name

Capella University

BUS-FPX4043 Compensation and Benefits Management

Prof. Name:

Date

Developing a Compensation Philosophy

Business Overview

The company operates as a limited liability company (LLC) specializing in concrete construction in Enosburg, Vermont, a rural community. The construction industry’s inherent unpredictability means that work schedules can fluctuate, requiring overtime and occasional layoffs during the winter months. As a result, the company compensates employees on an hourly basis, and they are classified as nonexempt under the Fair Labor Standards Act (FLSA) (Newman, 2019). The workforce consists of two crews, each led by a job foreman, accompanied by an experienced form setter and two general laborers, for a total of eight employees. Serving a loyal client base of professional residential and commercial contractors, the company provides quality services while contributing to the local economy (NAICS Association, 2019).

Factors Influencing Salary Determination

To deliver affordable yet high-quality concrete services that contribute to local socioeconomic growth, the company establishes wages based on several factors. These include the company’s startup status, local cost of living, labor availability, employee experience, industry standards, the risks associated with the job, and relevant minimum wage laws (Pay Factors Complete Guide – What Are Pay Factors in 2020, 2020). The Enosburg area, dominated by agriculture, offers limited job opportunities mainly in farming, construction, and supporting industries, with wages typically slightly above minimum wage. Given the physically demanding and hazardous nature of concrete work, wage rates are adjusted to align with industry standards and the physical risks workers face (Kassa, 2020).

Importance of Benefits in Compensation Package

While not legally required due to its size, the company recognizes the significance of offering benefits to attract and retain skilled employees. The business provides group health insurance, covering 60% of premiums for employees. A performance-based bonus system incentivizes productivity, rewarding employees based on the volume of concrete poured, fostering a team-oriented culture. In addition, the company offers paid vacation, sick leave, and holidays. Future considerations include the possibility of retirement plans and profit-sharing programs, further strengthening the compensation package (How Many Employees before Health Insurance Is Required – HealthInsuranceDigest.com, 2022).

Community Impact on Compensation Philosophy

The business owner’s approach to compensation is guided by a deep commitment to the well-being of employees and the overall prosperity of the local community. While local wage standards may be modest, the owner prioritizes fair compensation, believing that investing in employee satisfaction and well-being will lead to mutual benefits for both the workers and the business. Beyond business operations, the company engages in community outreach and pro bono projects, aiming to strengthen ties with local businesses and contribute to the broader development of Enosburg and its surrounding areas.

Conclusion

The company’s compensation philosophy reflects a commitment to fairness, employee well-being, and community involvement. By prioritizing these principles, the business not only fosters employee loyalty and productivity but also inspires positive change within the local community. In doing so, it creates a supportive environment that leads to shared success and growth for both employees and the company as a whole.

References

Kassa, B. A. (2020). A Decision Support Model for Salary Structure Design. Compensation & Benefits Review, 52(3), 109–120. https://doi.org/10.1177/0886368720905696

NAICS Association. (2019, July 29). NAICS Association. NAICS Association. https://www.naics.com/

Newman, B.G.J. (2019). Compensation (13th ed.). McGraw-Hill Higher Education. https://capella.vitalsource.com/books/9781260486100

Pay Factors Complete Guide – What Are Pay Factors in 2020. (2020, May 9). Salary.com. https://www.salary.com/articles/pay-factors-complete-guide-what-are-pay-factors-in2020/