Case Analysis Questions 3. Problem Solving As a compensation consultant, you’ve

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Case Analysis Questions

3. Problem Solving As a compensation consultant, you’ve been called in to review how SAS pays its employees and the benefits it offers them. You’ve heard some employees say that they could be attracted to other employers if they offered higher salaries. Employees overwhelmingly like the SAS benefits and the working climate, but the fact is that offers of higher pay elsewhere could be hard to say “no” to. What insights do motivation theories offer about this situation? Should it be addressed somehow with changes to the way SAS presently operates? Or, is this a situation where time will take its course and those who leave will depart for their own good reasons, while those who stay will continue to be motivated to work hard by the current system?

Explanation / Answer

Ans:

The objective of a good compensation policy is to retain talented employees, employee engagement and employee motivation for a great performance to achieve the organizational objectives. Compensation has two components- salary and benefits.

Employee turnover happens because of the following reasons:

SAS offers decent salary and it offers flexibility to maintain work life balance. It also offers other benefits like pharmacy, doctor, gym etc. However, some employees feel that because of the low employee turnover there are limited opportunities for future growth.

According to Maslow’s theory a person does not feel a higher need until the current needs are satisfied. According to the theory every person has a hierarchy of needs that ranges from lower to higher and the person has a tendency to higher needs once the lower needs are satisfied. The lower to higher needs in the hierarchy are- Physiological needs, safety needs, social needs, esteem needs and self actualization. Working environment at SAS fulfills the theory as it provides work life balance, safe working environment etc.

Herzberg’s theory points out the factors which cause employee satisfaction and dissatisfaction. According to the theory there are two factors- motivating factors and hygiene factors. Motivating factors are – achievement, recognition, work itself, responsibility, advancement and growth. Hygiene factors are company policy, supervision, relation with supervisor, working conditions, salary etc.

According to the theory a job should have challenges to utilize full ability of the employee. Based on the performance an employee should be given increasing levels of responsibility to match his capabilities and strengths. If a person’s capabilities are not fully utilized then there would be motivation problem.

SAS also fulfill the requirements of Herzberg’s two factor theory as it offers good working conditions with decent salary. However, the growth opportunities are limited due to low attrition rate.

Based on the above analysis, a certain level of attrition may be permitted based on employee performance. In case an employee has demonstrated higher capabilities he may be retained by utilizing his capabilities by offering more responsibilities.

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