Compensation is defined as the reward an employee receives for the work they performed at an organisation, either monetary or nonmonetary (Lepak & Gowan, 2010). This strongly influences an employee’s behaviour and attitude as it shows how the company values them. Further, a competitive compensation system enables companies or employers in attracting, motivating and retaining their employees. Well-known for its GORE-TEX fabrics, W.L. Gore & Associates has been consistent in being one of the top companies to work for in years. The firm utilises team approach, rather than a typical organisational set-up, since innovation is one of Gore’s hallmarks. The methodologies or approaches the company use enable them to achieve their goals in compensating the employees with internal fairness and external competitiveness.
Gore’s Employee Compensation Practices
Gore is using internal fairness and external competitiveness approaches for their compensation plan. These allow the company to succeed with its goals in regard to providing compensation to the employees. Internal fairness approach With this approach, at Gore, associates in the same team rank each other based on the work they have done for the benefits of the company, which are then used to determine the pay and raises for their co-workers. This enhances the transparency with the organisation as well as the teams. Also, associates will be encouraged to perform well and be more productive to get a higher ranking, which in turn will reflect to a boost in the company’s overall productivity and revenues. On the contrary, as ratings are based on the associate’s co-workers, there is a possibility of bias and unfair, poor judgement, leading to unreliable results.
Chances are, associates will be discouraged and less engaged, and a possibility of a high turnover rate in the organisation due to employees leaving the company. External competitiveness approach This approach follows a typical strategy, wherein the compensation is based on the similar jobs at other companies that helps in attracting, motivating and retaining employees. According to equity theory as discussed by Lepak and Gowan (2010), employees will be motivated to be more productive when they believe that their compensation is at the right level as compared to how others are treated in the same situation or manner. Also, paying employees in a fairly manner limits worker’s claims of unfair treatment (Kokemuller, n. d.) Hence, increase in the employees’ levels of motivation and higher productivity. However, it might be difficult to establish the correct market rate especially if the rates indicated by other companies are incorrect. The firm’s competitors could provide a higher salary figure that might eventually cause a higher operational cost that will negatively impact the company’s profit and revenue margins.
Probability of Achieving Company Goals
With the peer rating approach, W.L. Gore and Associates can achieve internal fairness as the ranking is provided by the associates of the same team based on the contribution made by every associate. Employees will be more motivated and engaged in performing well. If an employee believes that they receive fair compensation, this would decrease the turnover rate for Gore, and the company and its associates will be able to achieve a common goal.
Joining W.L Gore and Associates
I like the fact that the company is following a non-typical organisational set-up. I will definitely join the company as in my view, I will be able to grow up here professionally with the help of my fellow associates who encourage and motivate me to do better with my job. With this kind of management, one will have the ability to be equally respected and become a better employee.
Summary and Conclusions
A competitive compensation is very motivating and rewarding. As an employer, it is your responsibility to ensure that your associates or employees are properly compensated. This will let them feel their value and importance in the company and make them stay for a long time. W.L. Gore’s approach is indeed very unique and inviting. Their approach will help them become competitive and increase their profit margins as they have employees that are motivated to work for the company. Downsides are always around, but of course, with proper management the company will be able to overcome these.
References
- Kokemuller, N. (n. d.). The advantages of internal equity in a compensation plan. Retrieved from Chron.com: https://smallbusiness.chron.com/advantages-internal-equity-compensation-plan-81169.html
- Lepak, D., & Gowan, M. (2010). Human resources management: managing employees for competitive advantage. Upper Saddle River, NJ: Pearson Prentice Hall.
