Compensation and Benefits Strategies Recommendations

Compensation and Benefits Strategies Recommendations

University of Phoenix

HRM 531

March 24, 2015

Compensation and Benefits Strategies Recommendations

Introduction

Providing a first-rate compensation and benefits package for Mr. Stonefield and Landslide Limousines employees can be an important part of the recruitment and retention of top notch customer driven limousine drivers, especially since Landslide Limousines is organized as a small business in Austin, TX, and seeking to employee about 25 drivers and support staff. My function here is to conduct an analysis of the relevant market by determining what companies in this market are providing to employees from a total compensation perspective. I will then recommend a pay structure. From that analysis I will design and cobble together a total compensation and benefits strategy that Landslide Limousines can afford. Next, I will consider the use of performance incentives and merit pay to recognize outstanding employees and keep them fully engaged with their employer. Lastly, I will determine which employment laws are applicable to Landslide Limousines as they organize and do business in Texas.

Market Evaluation

Small start-up businesses like the limo service Bradley Stonefield is establishing has to face many challenges. The current unemployment rate in Austin, TX is 3.5%, well below the national average of 5.5% (BLS, 2013). Despite the relatively low unemployment rate, based on the Bureau of Labor and Statistics the average limo driver in Austin, TX makes between 6 – 10% less than the national average of $27,670, or $13.30 per hour. A Texas limo driver averages $22,620 per year, or $10.88 per hour (BLS, 2014). This standard includes both tenured and new drivers. This is well above the Texas minimum wage of $7.25 per hour, as of 2014 Bureau of Labor and Statistics.

Due to the tight competition for labor in Austin, TX, hiring qualified and experienced limo drivers for a small start-up business will be challenging. Austin has over 400 competing companies in the limo business and this will create a number of issues when it deals with human resources. Many of the competitors do not offer health-care or other benefits except for direct compensation and some retention of their tips. None are unionized (BLS, 2014).

Among the problems that Landslide Limousines could expect in this market is high employee turnover because of the low wages and lack of benefits. Another factor to consider is the recovery of the national job market in the last couple of years and the low local unemployment rate. The number of qualified applicants is expected to decrease as the economy improves and employment in other sectors of the market picks up (BLS, 2014). As this trend continues into the future it is expected that wages and benefits will rise as companies compete for fewer and fewer available, qualified applicants.