BSBHRM505 Manage Remuneration and Employee Benefits Assignment Answer

BSBHRM505 Remuneration and Incentive Plans at Priceline Pharmacy

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Assessment 1

1. In this part, the remuneration models of manager and entry level employee have been compared. It is important to note here that remuneration model of Priceline Pharmacy ensure that there is a right balance between variable and fixed rewards. These comprise both short as well as long-term incentives.

Remuneration Model for Manager

Fixed Component

Base salary is decided based on job responsibilities, scope of work, and duties. Managers in the company are paid an average base salary of AU$82,000 annually.

Variable Component

• Performance Bonus

The bonuses are designed considering both non-financial and financial factors, such as organisational development, strategic initiatives, financial performance, market development, etc. For managerial position, the bonuses are provided based on target basis, individual performance rating, subordinate rating, and job function handling. Managers also get non-cash bonus, and milestone bonuses on achieving a set target.

• Share Award

Managers are entitled to receive organisation’s share under Share Award Scheme of the company for giving exceptional performances over the years.

• Fringe Benefits: Provident funds under Occupational Retirement Schemes Ordinance (ORSO). For 5% contribution from employee, organisation pays 12.5% of the base salary.
• Other Benefits: Dental insurance, free monthly check up, 20% off on all products for employees, business travel insurance, House Rent Allowance for non-native employee, medical insurance, life and personal accident insurance, and employee compensation.

Remuneration Model for Entry Level Employee

Fixed Component

Base salary for the entry level employee cannot be more than AU$64000 per annum.

Variable Component

• Performance Bonus

Bonuses are provided only for achieving the target bracket or exceeding the expectations of the manager. This is only provided at the end of the quarter. Bonuses cannot be more than 8% of the base salary in any case.

• Share Award

The Share Reward Scheme is not applicable for entry level positions. A minimum of five years of working with the company is required to become eligible for this scheme.

• Fringe Benefits:

Provident funds under Occupational Retirement Schemes Ordinance (ORSO). For 5% contribution from employee, organisation pays 12.5% of the base salary.

• Other benefits

Dental insurance, free monthly check up, 20% off on all products for employees, business travel insurance, House Rent Allowance for non-native employee, medical insurance, life and personal accident insurance, and employee compensation.

2. Salary Structures

For Full-time (Entry Level) Employee

For Part-time Employees

3. Salary Wage Graph

4. Legislations for Remuneration and Benefits

The company follows the legislations, such as Employment and Labour Act, 2019 and

Remuneration and Allowances Act 1990, and Corporation Act  

Assessment 2: Incentive Plans

In this part, an incentive plans for both permanent and part time employee are discussed.

Incentive Plan for Full-Time Employee

• Performance Expectation: The incentives are provided based on the evaluation of performance of employee. The employee’s performance will be judged based on the following criteria:-

1. Overall Development Rating
2. Leadership Skills

• Peer Leadership

1. Resource Management
2. Consistency in Performance
3. Commitment to Business plan

• Initiative and Innovation Rating
• Teamwork Rating
• Performance Based Bonus Structure:The bonus will be paid on quarterly basis based on the performance of the employee. The condition is that employee must have completed 12 months of working with the company. No bonuses will be paid to employees working in probation period.
• Salary Increment:As per current policy, the remuneration will be reviewed after the end of every financial year. In no case, the executives will be offered an increment more than 20% of CTC.
• Salary Packaging:The CTC for entry level full-time position would be AU$64000 per year. However, this is subjected to a raise based on the fulfilment of the performance rating.
• Fringe Benefits and Perks:Dental insurance, free monthly check up, 20% off on all products for employees, business travel insurance, House Rent Allowance for non-native employee, medical insurance, life and personal accident insurance, and employee compensation.
• Share Options:There is a share award scheme which is completely a long-term plan for full-time employees only. The shares are offered to those employees who are giving best performance for more than 3 years continuously.
• Termination or Exit Benefits: Priceline Pharmacy abides by the law and hence, offer some benefits to employees who are leaving the company or those who get terminated. These pension and retirement funds benefits, health insurance, and unemployment benefits up to $400 AUD.

Incentive Plan for Full-Time Employee

• Performance Expectation: Criteria for evaluating the performance comprise:-
  1. Initiatives to solve complex problem
  2. Ability to manage unexpected events
  3. Self-goal setting abilities
  4. Leadership qualities and Skills
  5. Consistency in Performance
  6. Commitment to Business plan
• Performance Based Bonus Structure: The bonus will be paid on quarterly basis based on the performance of the employee. The condition is that employee must have completed 12 months of working with the company. No bonuses will be paid to employees working in probation period.
• Salary Increment: As per current policy, the remuneration will be reviewed after the end of every financial year. In no case, the executives will be offered an increment more than 10% of CTC.
• Salary Packaging: The salary for the part time employee will be only AU$1500 per month and is subjected to a raise of 10% based on the performance.
• Fringe Benefits and Perks: Dental insurance, 10% off on all products for employees, life and personal accident insurance, and employee compensation.
• Share Options: There is no share award scheme for the part time employees. However, they will be offered permanent position in the company if they are associated with the company for over 15 months.
• Termination or Exit Benefits: Priceline Pharmacy does not offer any special benefits on termination or voluntarily exit of the employee.

Assessment 3

Part A

Background

Priceline Pharmacy is an Australian beauty and health care retailer founded in the year 1982. The company works under the parent company of Australian Pharmaceutical Industries. The company is announcing a new remuneration policy for the employees. The remuneration policy will described the outline and objectives of the policy. The different types of remuneration will also be enumerated in the policy.

Objectives

The company has acknowledged the need to revise the remuneration policy so as to attract and retain the employees in the organization. Priceline pharmacy is announcing a new remuneration policy that is competitive and will comply with all the standards and regulations of the government (Vogler, et. al., 2015). The company has taken this decision to comply the remuneration policy with the objectives and aims of the company. Financial and non-financial criteria are included in the new remuneration policy.

Forms of remuneration

 The company has included two types of remuneration in this remuneration policy. Given below are the two forms of remuneration:

• Fixed remuneration: Fixed salary will be given to individuals as per the market standards and job description of their position.
• Variable remuneration: Variable remuneration will be provided to the employees as per their efforts and performance level in attaining the organizational goals.

Conditions

There are some set conditions for both the types of remuneration. The conditions for fixed remuneration are that the employees have to work for exact 8 hours in the company and the foxed targets for the months have to be achieved by them (Schulman &Dabora, 2018).

The milestones for the variables remuneration are different as the employees will get extra and variable salaries when they exceed the monthly targets and the work for extra hours in the company. The proportion of extra salaries will depend upon the working hours.

Part B

Remuneration strategy

Introduction

Priceline Pharmacy has taken a decision to review the remuneration rates as per the relevant market scenario and the salaries paid in the market (Dooley, 2016). For the successful implementation of the remuneration policy, the company is developing a remuneration strategy that will help the employees to know about the new rules and regulations related with the policy.

Aims and Objectives

The main aim of the remuneration strategy is to make the employees aware about all the new compliances and regulations associated with the policy (Vogler, et. al., 2015). The new remuneration strategy has an objective to motivate the employees and retain them in the business for a longer duration.

Current remuneration trends

The current market trends in the industry says that salaries of the employees are higher at Amcal and the average pay is AUD 38. The company Chemist warehouse pays the lowest salaries as AUD 30. Priceline Pharmacy has moderate range of remuneration and the company will review its remuneration structure as it will now pay higher wages.

Legislative parameters and context

The salaries in the country are regulated by The Australian and New Zealand Standard Classification of Occupations Codes  and all the salary structures are complied with the codes.

Organizational context

The motive of the business is to have highly skilled and competent employees in the company so the new remuneration strategy is set to attract more employees and also to retain the older employees.

Internal Consultation, stakeholders and approval process

The remuneration plan is made by the consultation of all the important stakeholders of the business. The key stakeholders who are consulted internally are existing employees, Investors and Higher management

The given process is followed for the approval of the policy

• Draft of policy
• Submission of remuneration policy
• Presentation to senior management and investors
• Communication to other stakeholders
• Meetings
• Approval

Remuneration strategy

The company has developed a new remuneration strategy to provide the best competitive salaries to the employees and motivate them. This will also help to retain them in the company.

Market survey

After the thorough survey of the market, it has been analyzed that Amcal is the highest paying company and the salary rates of Priceline Pharmacy are moderate.

Performance expectation and link between incentives and performance

The employees will be provided incentives when they work exceeding the monthly targets (Duckett&Romanes, 2016). The employees have to sell as much as medicines they can and the proportion of their extra salary will be added in their fixed salary.

Improvement guidelines

The salary structure will be improved when the market trends will change further and the employees will always get a better remuneration.

Recommendation

• It is recommended to the company to always comply with the legislations.
• The market trends must always be analyzed by the business.
• Employees must be paid fairly.

Part C

References

• Dooley, M. (2016). Submission to the Pharmacy Remuneration and Regulation Review.
• Duckett, S., &Romanes, D. (2016). Submission to Review of Pharmacy Remuneration and Regulation.  Grattan Institute.
• Schulman, K. A., &Dabora, M. (2018). The relationship between pharmacy benefit managers (PBMs) and the cost of therapies in the US pharmaceutical market: A policy primer for clinicians.  American heart journal,  206, 113-122.
• Vogler, S., Lepuschütz, L., & Schneider, P. (2015). Pharmaceutical distribution remuneration in Europe.  Journal of pharmaceutical policy and practice,  8(1), P23.