Enhancing Employee Retention through an Effective Compensation
and Benefit System: A Strategic Proposal for Holland Enterprises
Holland Enterprises, the largest employer in your city, has experienced a significant loss of staff
due to a perceived unfair and uncompetitive compensation and benefit system. As a highly
regarded human resource consultant, you have been hired to revise and enhance the
compensation and benefit strategy to address these concerns and improve employee retention.
Using the information provided, prepare a comprehensive proposal for a revised compensation
and benefit system for Holland Enterprises. Your proposal should include the following:
1. A discussion of how an effective compensation and benefit system contributes to
organizational effectiveness.
2. A detailed description of the principal components of the revised compensation and
benefit system, including:
o Compensation and benefit philosophy
o Pay structure architecture (pay grades, pay ranges, and pay width)
o Ratio of base pay to incentive (bonus) pay
o Emphases on external equity vs. internal equity
o Key types of benefits to include (e.g., health insurance, retirement planning,
vacation time, etc.)
3. A persuasive argument for the skeptical top managers to increase their compensation and
benefit expenses, demonstrating how this investment will reduce employee attrition and
contribute to the long-term success of the company.
Your proposal should be between 1,500 and 2,000 words.

Compensation and benefit system
2
Attracting and retaining the most talented employees is essential for long-term
organizational success. An important component to attracting and retaining such
employees is the design and implementation of an effective compensation and benefit
system.
Assume the role of a highly regarded human resource consultant hired to review,
analyze, and revise the compensation and benefit system utilized by your city’s largest
employer, Holland Enterprises. The firm employs 3,500 employees, but since 2007 has
lost 25% of its staff. Exit interviews indicate the primary reason a majority of these
employees have resigned is because of a compensation and benefit system that is
perceived to be unfair and uncompetitive in the marketplace.
Present to the management a revised compensation and benefit strategy. Your
proposal should include a discussion of:
 How an effective compensation and benefit system contributes to organizational effectiveness.
 The principle components of your revised compensation and benefit system for a large-scale organization as
well as a recommendation for each component.
 A convincing argument to the already skeptical top managers of this organization to increase their
compensation and benefit expenses.
At a minimum, your compensation and benefit system would include the following
components:
 Compensation and benefit philosophy
 Pay structure architecture (pay grades, pay ranges, and pay width)
 Ratio of base pay to incentive (bonus) pay
 Emphases on external equity or internal equity
 Principle type of benefits to include (example: deferred compensation match, health insurance, vacation and
sick leave, etc.)
Compensation is the amount paid in lieu of a service or anything from a person. Compensation is
a term everybody is familiar with. This term denotes the payment in lieu of the work done. The
compensation depends on so many other factors and those are, the type of work done, the effort
involved in it, the quality of the work done, the policy of the organization or the local standards,

Compensation and benefit system
3
the job designation and responsibilities covered, the experience of the individual etc. Basically it
is also perceived as payment but it also acts as a tool of motivation for the employees. The
compensation plays a very important role in today’s world.
Compensation is paid to someone who has given something to you. In terms of organization,
compensation is the amount the employer gives to the employee in lieu of the work done by the
employee. The compensation is decided in various ways, such as the market trend, the
competition of close substitutes, the experience of the employee, the job description, the
responsibilities he/she is expected to fulfill in his job etc. Compensation and other benefits of
compensation help the employee in various ways of motivation and also help in the retention of
the employees. Employee benefits are also a form of compensating the employees for the work
they do in the organization.
Thesis statement-“It is the biggest deal for the organization to decide over the compensation and
the benefits of the employees. Compensation can act in various ways. Motivation, retention,
attrition etc can be some consequences of compensation. A paid benefit can retain the employee
or can lead to the attrition of the same. This is the main and the direct link between employee
motivations also.”
The problem with this company i.e. Holland Enterprises is that the policy it has adopted for
compensation seems to have a serious issue and that is why the attrition of the employees have
increased terrifically. The company seriously needs to revise the strategies in terms of
compensation to retain its employees to a longer extent. The revision of compensation policy
will keep the employees satisfied and they would not leave their jobs so quickly. An effective

Enhancing Employee Retention through an Effective Compensation and Benefit System: A Strategic Proposal for Holland Enterprises

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