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Compensation and Benefits Strategies Recommendations HRM/531 May 12, 2014

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Mr. Stonefield, our esteemed client who is starting Landslide Limousine Service, is looking to us for recommendations for pay and benefits strategies. In a voicemail left on our office phone, he has helpfully summarized his five main areas of concern and these are summarized below. 1. 2. 3. 4. 5. He wants to be comparable with other limousine services He wants to fit in well with the limousine market in the Austin, Texas area He reiterates that he is planning for 25 employees His projected annual net revenue for the first year is south of $50,000 He predicts five percent revenue growth over the next couple years. The overall unemployment rate in any given area is a crucial factor in the retention rate of any given industry or field in that area, and the limo industry is no different. (Mergent 2013). Austin, Texas, in recent years has become a hotbed of growth and an area that has attracted much new blood; (5.2 (BLS, 2013)) resulting in a 2013 unemployment rate (five percent) that is below the state and the national average (roughly seven percent) . (Robert Grattan, “Austin Unemployment Rate Sets the Pace”, www.bizjournals.com, December 19, 2013). Mr Stonefield was wise to select Austin for his business, then, as it is in the midst of a boom that shows no signs of abating. In fact “Austin takes the top spot on FORBES’ annual list of America’s Fastest-Growing Cities for the 4th year in a row. With a 2.5% population growth rate (estimated annual) for 2013—the highest of all the geographic regions—and an economy that expanded 5.88% last year, it’s hard for other cities to compete these days.” Erin Carlysle,

www.forbes.com “America’s Twenty Fastest Growing Cities”, February 14, 2014. And much of this growth is in the realm of music, festivals, nightlife, bars, and socializing. (www.austintexas.org). This is exactly the target-rich environment for a limo service. Therefore, the retention of limo operators will prove a key area for the growth and health of Landslide Limousine. It is one thing to attract; it is quite another to keep that talent, and to meet business objectives (Cascio, 2013). Doing this encompasses a smart, but aggressive plan to provide competitive salaries and

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targeted benefits. A strategic look at benefits implies that the benefits provided to employees will also help attain business objectives Mr. Stonefield has informed us that a primary goal of his is increase revenue fiver percent yearlty within the next several years. In the jargon of profits “long-term” means a period of three years (Robbins & Coulter, 2012). A long term plan of attack, as it is called in the military, requires a contemplative look at the entire industry scene. These areas include customer service strategies, repair and maintenance strategies, and service pricing strategies. But too much focus on these issues puts the cart before the horse—for, without an army of competent, safe, knowledgable, professional and friendly drivers, nothing else is possible. And this is where compensation and benefits plans come in—for they will make or break Landslide Limo.

Market Evaluation Landslide Limos is obviously a fledgling company and offering exorbitant salaries is going to be a huge challenge, at least for the foreseeable future. In order to know what exactly to offer, Mr Stonefield must be aware of the yearly salary of the average limousine driver in Texas; this salary is less than $23,000.00, for Annual Year 2013. (Suttle, 2013). Compensation Structure How much an employee is paid for his or her time and effort is perhaps the biggest indicator of that employee’s satisfaction with his or her job. Since Landslide Limousines is shooting for 25 employees (limo drivers) in its first year, the performance of each of those 25 employees will play the key role in any increase in pay for them. Since Landslide is just starting out, Mr Stonefield will be forced to run the company day-to-day, himself, probably will little help. Our recommendation is that Landslide Limousines keeps its number of employees low and offers above-market standards in

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fixed income rates. Upon utilizing a point system and support roles for its drivers, Landslide Limos can then adjust salaries of its drivers, based on their performance and experience level. (Cascio, 2013). Such an intelligent, aggressive, yet non-reckless avenue of attack will ensure that Landslide Limo retains a talented, competent, courteous, professional, and satisfied fleet of drivers.

BLS, (2013). Retrieved May 12, 2014 from http://data.bls.gov/timeseries/LNS14000000. BLS, (2013). Retrieved May 12, 2014 from http://www.bls.gov/web/laus/laumstrk.htm. BLS, (2013). Retrieved May 12, 2014 from http://www.bls.gov/web/metro/laummtrk.htm. Cascio, W. F. (2013). Managing human resources: productivity, quality of work life, profits (9th ed.). New York, NY: McGraw-Hill. Mergent, (2013). Retrieved May 12, 2014from http://mergent.firstresearchlearn.com.ezproxy.apollolibrary.com/industry_full.aspx?pid=187
Robbins, S. P., & Coulter, M. (2012). Management (11th ed.). Upper Saddle River, NJ: Prentice Hall.

Suttle, R., 2013, How Much Do Limo Drivers Earn? Retrieved May 12, 2014, from http://everydaylife.globalpost.com/much-limo-drivers-earn-5416.html

Cascio 9ed (1st ed). McGraw-Hill Create. Retrieved May 12 2014, from http://online.vitalsource.com/books/9781121903814/page/110

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