Question

Please read case above and answer the question , thank you .

what organizational processes does compensation affect and what is costco's rationale for having an exceptional compensation plan ?

Case 11-1 Discounting Everything but Compensation at Costco Costco has gone head to head with the likes BJ's, Target, and SAM's Club and has come out the winner. Offering over 3,700 discounted household products to over 71 million people across Asia, Spain, Puerto Rico, Mexico, Canada, and 44 states in the United States, and like their competitors, they also offer additional services including mortgage, car, and home insurance, as well as travel packages.(1) Costco has proven though that there is more to warehouse stores than just low prices. So how can Costco beat other retailers like Walmart, BJ's, and Target, who sell similar preducts and services? By having "great jobs, great pay, great benefits and a great place to work,"(2) Costco has attracted employees who are ardent and arduous workers, who thrive on working in a dynamic and hypercompetitive industry, who are high achievers and excel in a team environment. So how does one then attract such superstars to one's business? Costco has learned that the secret to hiring the best and the brightest is not through salary alone buit by offering à superior work environment including a Costco has learned that the secret to hiring the best and the brightest is not through salary alone but by offering a superior work environment includinga comprehensive benefits package. They pay a higher insurance premium percent than their competitors toward employees' and include in the plan the employees entire family (spouse, domestic partner, and dependents). Employees pay their portion of the premiums with pre-tax dollars, therefore reducing their taxable income. Employees also qualify very quickly for benefits relative to industry standards. Salaried employees receive benefits after the first month of service while full-time/part-time hourly employees are eligible after 90/180 days of service or 450/600 hours. Costco's generous benefits package includes the following: . Health care Dental care İmti I Pharmacy program . Vision program 401 (k) plan Dependent care assistance plarn . Care network Voluntary short-term disability Long term disability Life insurance - Employee stock purchase plan o Health care reimbursement account Does Costco's strategy about superior benefits work? If one asks their employees, the resounding answer is yes. Glassdoor.com ranks the best companies to work for based upon benefits and compensation and obtains this information directly from the firms' employees. Ninety-two percent of Costco's personnel thought CEO Craig Jelinek was doing a good job, while 82% would want a friend to work there as well. Interestingly their benefits package received an 88% rating, while employee satisfaction slipped to 76% Nonetheless the scores where high enough to rank Costco 2nd overal,just behind the megastar Google. 3) One Costco employee on glassdoor.com's website summed it up quite wel The best incentive at Costco is the benefits, whether you are working full time or part time.I paid 20 bucks a month for a ss0o deductible with no co-pay. The hourly compensation is more than fair, and I got the sense very quickly that management was eyeing the most competent workers for advancement. .. Great wages, benefits and working for a great company that really truly cares about their members and employees.(4)

Answer 1

Compensation has a profound impact on multiple business processes. First and foremost, compensation has a direct impact on the human resources of the organization. If the employees feel that they are being rewarded rightly for the work they do, they would be satisfied and would be highly productive. This would encourage a healthy and productive environment within the organization. As we see in the case above, compensation is not only the salary but also benefits like insurance, medical benefits, etc which eases a lot of expenses which otherwise the employees would have to bear out of their salary itself if they were to bear it on their own. In turn, since employees would be a happy lot, hence it would have a positive impact on other business processes like marketing, operations, sales, etc which needs motivated people to carry out tasks. Hence we can say compensation has an overarching impact on the business.

Costco's rationale for having exceptional compensation is to attract and retain top-notch talent to counter the challenges posed by competitors. These people are high achievers who thrive and excel in a dynamic and productive environment. And a good compensation package is one of the keys to have a positive and attractive work environment and attract strong talents. Hence Costco has developed a highly attractive compensation plan for its employees so that they are satisfied and motivated to perform at the next level which helps Costco to compete successfully.