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This paper aims to analyze the compensation strategy used by the H&M retail network and compare it to the systems used by Microsoft and SAS.
H&M is the Swedish company that produces and sells clothes internationally. In the US market, the company is represented by its retail branch with stores open in many states across the country. The basis of the compensation strategy of the retail branch is offering higher salary levels and significant worker benefits in order to retain experienced workers and attract the new ones. According to the data from the Glassdoor.com the company offers an average wage of almost 11 dollars per hour for its store workers, which is significantly higher than other retail networks. There are also benefits offered to the employees including paid vacations, company sick pay, incentive bonuses, and private healthcare. That indicates orientation towards higher pay and a good balance on the work/life scale. The company also offers plenty of opportunity for growth with over 4,500 promotions in the US alone over the 2014-2015 period.
The H&M seems to follow the SAS model for the most part. It focuses on supporting employees by giving them sizable benefits, competitive pay and career opportunities. The overall hierarchy of the H&M network is strictly stratified. That is different compared to the SAS “company as a family” approach. Individual stores, however, are much less stratified. The management model also seems transparent similarly to SAS. The company has fully disclosed their factory information to the public which is something most major attire retailers avoid doing. That indicates the focus on honesty and ethics within the company, including the matters of payment and benefits. Both companies operate in the markets where the experienced workforce is a valuable asset and face harsh competition for the workers.
In that sense, H&M is similar to all technology-intensive companies which have to focus on the external market implications when designing their compensation strategies (Diaz & Gomez-Mejia, 1997). All of these similarities are not surprising since both SAS and H&M pursue the goal of retaining employees by providing the best working conditions possible (Bryant & Allen, 2013). However, H&M tends to hire younger workers who are more focused on career opportunities (Zacher & Frese, 2011). That is the reason why the company emphasises growth opportunities more than SAS or Microsoft does. They support that focus with their payment strategy offering a two-time increase in salary for managerial positions. Another key difference is that compensation strategy plays a much more important role in the overall HR strategy of H&M compared to SAS. In the retail business, compensation is crucial for worker retention which is why it plays a prominent role in the strategy of H&M.
The compensation strategy maps offer a clear and easily understandable representation of the compensation strategy, based on its key factors. They can be used as a great visual representation, allowing a leader to easily compare and assess different approaches, without working with huge masses of data. Such graphs can also be used to represent the company strategy to the employees in a visually appealing way. It is much easier to make all of the advantages and key points apparent by using a comprehensive image, rather than massive spreadsheets. All of these factors make the maps a convenient tool for presenting different strategies to any audience.
References
Bryant, P., & Allen, D. (2013). Compensation, Benefits and Employee Turnover: HR Strategies for Retaining Top Talent. Compensation & Benefits Review, 45(3). 171-175.
Diaz, S. M., & Gomez-Mejia, L. (1997). The effectiveness of organizationwide compensation strategies in technology intensive firms. The Journal Of High Technology Management Research, 8(2), 301-315.
Zacher, H., & Frese, M. (2011). Maintaining a focus on opportunities at work: The interplay between age, job complexity, and the use of selection, optimization, and compensation strategies. Journal Of Organizational Behavior, 32(2), 291-318.
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