Chapter 14: Structuring Compensation Plans

When thinking about structuring compensation plans we need to understand what motivates the individuals that work in our organizations and how our compensation plans support our organization's culture. A comparison of two very different companies operating in a similar retail setting (i.e. upstate New York) should give us an opportunity to explore how we might approach structuring compensation plans differently in a similar operating environment, but that have very different operating structures. Parkleigh Pharmacy is a 'boutique' retail store that specializes in selling luxury items and Kaufmann's is a larger department store that focuses on selling its products to middle-income consumers. When responding to this case study, you should focus on employee preferences as it relates to their choice between salary and fringe benefits, but more importantly the differences between salaried and commission-based compensation and how different methods of compensation are likely to motivate different people in different operating environments. In addition, from the preceding chapter (i.e. chapter 13), you could discuss the difference between broad and specialized job design and the promotional opportunities in both organizations (i.e. chapter 14) to add additional depth to your response.