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Target Corporation Case Study

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Target Corporation

Internal Equity and External Competitiveness Paper

Team C - Tabiatha Harrison, Emilio Galvan, Kenneth Mosely,

Lisa Moten, Torie Santos and Ruben Zuniga

University of Phoenix

HRM 424 - Compensation

Robert Muliero

October 29, 2007

Target Corporations

Internal Equity and External Competitiveness Paper

Introduction (Kenneth)

The Target Corporation prides itself in having an organizational culture where everyone is valued and rewarded for their efforts, determination, motivation, and hard-work. In that the employees are at the top of the list. Target certainly understands that it must take care of it employees in order for them to be equipped to take care of the customers. In order to motivate its employees, Target had created several compensation mixes to enhance the level of customer services given by the employees at the retail stores. Though there are many ways to pay, Target has implemented a base pay based on tier levels with the stores and departments structures. Target has also been creative in the non-monetary compensation packages to promote superior services as well and general non-monetary compensation supplements to support the base pay. The following is a discussion of both.

Monetary compensation packages offered by Target would include, but are not limited to base pay, merit pay, and differential pay, cost of living increases. Base pay is the guaranteed portion of the employees pay as long as they report to work for their perspective schedules. If the employee does not report to work for the hours scheduled, they will not receive the benefit of the pay. Merit pay is added to employee's base pay once a year with the exception of promotions given during the year. If the employee is in the same position for a full year, they will receive an annual review at which a merit increase may be given according to job performance. If the employee is offered and accepts a promotion throughout the year, they employee receives a merit increase based on the new position, employees experience and educational level, and performance leading up to the increase. The merit increase is also added to base pay moving forward.

Differential pay is offered to all employees who volunteer to work hours after 9pm until 7am the next morning. Target, as with many companies find it hard to staff during the night hours or for the graveyard shift. For those employees who are willing to give this time, Target gives them ad additional dollar per hour for every hour worked at the store level during these hours. If any employee works a shift that overlaps these hours, they are only paid the shift differential for the hours between 9pm and 7am. For example, if the shift is 7pm to 12am, they receive shift differential from 9pm to 12am only. Lastly, Target recognizes that the cost of living changes as the years pass. To stay competitive and for retention purposes, Target will give a cost of living raise. This type of compensation is added to base pay in order to make sure that employees fee secure in their job and meet the hierarchy of needs as described in the Maslow's Theory.

Target offers many Non-Monetary compensation packages to their employees. The benefits packages could be one of the most valuable assets the company posses in its quest to retain and motivate employees on a daily basis. Though there are many, some the most prevalent of the non-monetary packages would include the benefits package, social interaction, discounts, and advancement opportunities. As with many employers within the retail industry, employee benefits are strong portion of the compensation package. Employee benefits include "health benefits, vacation time, national and personal holidays, educational loans, tuition reimbursements, 401(k), and pension plans", to name a few (Target, 2007). Social interaction is provided to the employees through a diverse and enjoyable work environment. Employees are encouraged to get to know employees from other departments, levels, and shifts. Target employees are like a network of family and they tend to encourage each other to do the job well. Employees are also offered discounts on team member purchases from the store of 10% for themselves and dependants within the same household. In addition, discounts are available to "fitness centers, Sprints PCS, FTD Floral, H&R Block, Brooks Brothers and Jos. A. Bank retailers nationwide"; there is also financial services offered through the Target Credit Union (Target, 2007). Target provides opportunities for advancement through its cross training program. Employees are allowed to learn other job responsibilities for different departments in order to assist in staffing and help employees meet their need for hours within the organization. By doing this the doors are open to the employee taking a position in the department should one become available. The correct protocol for an open position is as follows:

1) Target post the position on the job board or employee room

2) Employs have certain amount of time to apply for the position using a company form illustrating why the employee feel he/she is the correct person for the job.

3) Target selects an employee and removes the posting.

4) The employee is transferred to the department and position change paperwork begins.

(Emilio's Part) How does the organization assess internal equity and external competitiveness?

Target strives to have an employee environment that follows their motto of "fast, fun and friendly" (Target, 2007). Their environment is one where the employee is allowed to learn as much as needed to perform their job. The employees are encouraged to learn all that is necessary to maintain the next level of employment. When an employee starts with the company they pay their employees according to the knowledge of the retail industry. Every employee is evaluated and their pay is adjusted to reflect this knowledge. They have several levels of employees and each is paid a different rate of pay. They maintain internal equity by paying their employees based on this knowledge, so some employees may receive a higher rate of pay then another. They offer most of their employees other benefits such as medical insurance and different leave packages. Target used to offer all employees vacation



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