The Virgin Blue Company Employee Compensation Plan


The Virgin Blue is small pharmaceutical company with ten employees. The store department has two employees while the administration section has five employees. On the other hand, the sales department has two employees. Reflecting the compensating differential theory, the proposed compensation scheme aims at improving the remuneration that each employee will receive in order to motivate them to perform optimally.

In relation to this theory, the proposed compensation plan intends to increase the benefits received by employees through commissions, retainer salary, and bonus for meeting targets, thus, limiting instance of unrealistic wage differentials at the Virgin Blue Company (Osterman 34). This paper attempts to develop a comprehensive compensation scheme for the Virgin Blue Company.

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Proposed Compensation: Hybrid piecework-commission scheme

The hybrid piecework-commission scheme involves setting remuneration packages for employees on the basis of a preset rate besides a percentage of output after meeting the target (Andreadis 9). The best way to motivate the Virgin Blue employees is by giving them commission for achieving something and the authority to do it in their own way.

Developing the compensation plan

The proposed compensation plan is meant to serve the employees of Virgin Blue Company within the three departments of administration, sales, and store. The plan will summarize the elements of wages, costs, hours, days, and month as part of the inventory for the company. The compensation plan is summarized on the table below.

Compensation plan Departmental costs Total
Administration department
Number of employees 5
Wage rate per hour $20
Number of hours work per months by each employee (8hours per day * 20 days per month) 160
Wage earned by each employee per month
= 160 * $20
Total labor cost for the department
= $3,200 * 5
Sales department
Number of employees 3
Wage rate per hour $14
Number of hours work per months by each employee (8hours per day * 20 days per month) 160
Wage earned by each employee per month
= 160 * $14
Total labor cost for the department
= $2,240 * 3
Motivational package (5% of total earnings upon meeting the store’s target)
Store department
Number of employees 2
Wage rate per hour $9.75
Number of hours work per months by each employee (8hours per day * 20 days per month) 160
Wage earned by each employee per month
= 160 * $9.75
Total labor cost for the department
= $1,560 * 2
Total labor cost $25,840

Rationale for the compensation scheme

Through focus performance management, the Virgin Blue Company will be in a position to create clear goals on performance appraisal, manage a positive feedback channel, and offer a continuous and systematic coaching to ensure that employees perform at optimal productivity level through the proposed compensation scheme. The rationale for the compensation plan is to address the following goals and objectives.


  1. Improve the efficiency and effectiveness of the current mode of employee remuneration through incorporation of a dynamic and flexible compensation that can motivate the workers to perform optimally.
  2. Ensure that the various available methods appeal to the financial health by the employees is met by the organization in a planned and sustainable manner.


For goal I:

  1. To ensure that the organization improves the standard of services that employees receive.
  2. To increase the number of employee motivation strategies that the organization handles on a daily basis in a bid to accomplish the organization’s objectives.
  3. To ensure smooth flow of information within and without the organization since motivated employees would want to give their best to the company.

For goal II:

  1. To avoid expenditure that would jeopardize the running of the organization’s basic activities in the form of unplanned monetary rewards to employees.
  2. To increase the number of staff available to attend to clients without creating undue pressure on the finances through additional of workforce.

From the above rationale, the plan does not aim to disseminate any particular compensation value, as its core purpose is to improve the flexibility of the compensation scheme to accommodate the interests of the company to maximize profits and employees to receive compensation that can be equated to the service they offer.

Advantages of the proposed compensation scheme

Job satisfaction and empowerment of employees

Through this approach, employees will be empowered and they will feel trusted and valued by the management personnel and the company. Naturally, human beings would wish for motivation through mutual consent and internalized empowerment and appreciation. Empowerment unleashes plenty of energy and motivation.

Reflectively, the motivation and energy aspects of appreciation function simultaneously at micro and macro levels to facilitate optimal functionality or productivity (Caldwell, Truong, Linh and Tuan 179). Empowering the employees will ensure a stable and sustainable win-win situation as employees will be motivated to work without much supervision from the management or their supervisors.

Modeling the compensation plan

The proposed scheme refers to the values of a supportive learning environment, concrete learning processes, and practices leadership that reinforce innovation. This model will offer the motivation to acquire, bond, comprehend, and defend among the employees. The vision of the program will be to create an ideal climate for innovation and communication among the employees (Sostrin 35).

Micromanaging labor and compensation efficiency

Reflectively, the scheme will give Virgin Blue the authority to use a preferred statistical approach towards creating standard compensation modules for employees. Since the variables to be considered include payroll system, line of business, location, and groups of employees, the company might benefit from the scheme since it is in a position to micromanage the efficiency of the labor force from the statistical data generated.

Besides, the scheme will provide a stable system of creating and managing the compensation measure in the company. Therefore, the corporate governance system in the company can easily align the payroll to short and long term objective such as employee development (Revels and Michele 65).

Creating and managing benefits allocation

The third step, which involves calculating of annual compensation, may help the corporate governance function in the company to modify its employee benefits and the scope of the employment contract to minimize incidences of redundancy. Therefore, Virgin Blue will be in a position to create the employee compensation structure without having to depend on the traditional methods that are silent on market dynamics.

Disadvantage of the proposed compensation scheme

The only disadvantage of the scheme is that the piecework aspect might not be motivational, especially during the low season when the demand for labor is lower than the supply in the company. However, this can be adjusted through setting of commission to be earned by each employee in the form of a retainer.


The strategies in this plan require the organization to take a collaborative perspective in dealing with the subject matter. In essence, this aspect means that the plan requires the management of the organization and the staff to work together at various levels. The main requirement for the creation of such a set-up is an exchange of information and knowledge relevant to the project.

Actualization of the tactics that this plan proposes requires the management of the organization to work closely with the staff and allow the staff freedom to associate with clients and form networks with other organizations as they accomplish their duties (Peetz, Gardner, Brown and Berns 408). It also enables the staff at the organization to seek advice and any other forms of aid. Lastly, the organization will apply the use of service-for-service method.

The method is an innovative way through which the organization can greatly reduce training costs, provide quality training for the staff, and ensure proper service delivery for clients, all at the same time. It would also eliminate the need to outsource for extra employees during busy days since the proposed compensation plan will motivate the current employees to perform optimally.


In implementing the proposed compensational plan, it is vital to consider the attractiveness of the wage payments. This paper presented a comprehensive review the reward plan that might help the Virgin Blue Company to motivate its employees. The proposed plan has more merits than demerits.

When properly implemented, the employees will feel more motivated and inspired to perform optimally by ensuring that their output improves. Consequently, Virgin Blue will benefit from improved performance by the employees, which translates into increased productivity.

Works Cited

Andreadis, Nicholas. “Learning and organizational effectiveness: A systems perspective,” Performance Improvement, 48.1 (2009): 5-11. Print.

Caldwell, Cam, Do Truong, Pham Linh and Anh Tuan. “Strategic Human Resource Management as ethical stewardship.” Journal of Business Ethics 98.1 (2011): 171–182. Print.

Osterman, Paul. “Job design in the context of the job market.” Journal of Organizational Behavior 31.2 (2010): 401–411. Print.

Peetz, David, Margaret Gardner, Kerry Brown and Sandra Berns. “Workplace effects of equal employment opportunity legislation: the Australian experience.” Policy Studies 29.4 (2008): 405–419. Print.

Revels, Mark and Morris Michele. “Technology impacts in organizational recruitment and retention.” Franklin Business & Law Journal 12.1 (2012): 61–69. Print.

Sostrin, James. Beyond the Job Description. New York, NY: Macmillan, 2013. Print.

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