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Compensation at W. L. Gore

The Type of Compensation Approach used by Gore

            For 20 consecutive years W.L. Gore & Associates was included on Fortune’s “100 Best Companies to Work For” in addition to being the recipient of numerous other recognitions including being ranked number 15 on the 2017 World’s Best Multinational Workplaces list by the Great Place to Work Institute. The corporation received these accolades due to its innovative compensation approach. The company uses an innovative and team based compensation approach to motivate staff to achieve organizational goals and objectives.   Internal fairness and external competitiveness are the two main features of the company’s compensation plan (Giardina, 2014). 

To be externally competitive on its compensation approach, the company compares pay for jobs in the company with pay for comparable jobs in other organizations.  To ensure salaries offered by the company are competitive in the relevant labor markets, the company does a lot of benchmarking to find out what other organizations pay their employees for jobs similar to the ones Gore offers.  Benchmarking ensures the company’s compensation plan is externally competitive in the industry.  Gore’s compensation plan enhances fairness and transparency and ensures the company offers higher pay for comparable jobs in the industry. Gore’s compensation plan keeps labor turnover lower than the industry benchmark. Proper benchmarking involves efficient and accurate market assessments and salary comparisons. Geographic location, company size and education level are some of the factors that are considered during benchmarking (Giardina, 2014).

 The Pluses and Minuses of this Approach

            Benchmarking as applied by W.L. Gore & Associates provides various benefits or pluses to the organization. Benchmarking enables an organization to get an idea of the various differences between various sectors in terms of compensation plans. By using benchmarking, an organization is able to discover the pay levels which are typical to the industry it operates in. The organization is also able to get an accurate reflection of pay packages in the industry which would enable management to make informed decisions (Voordt & Per, 2018). Moreover, benchmarking enables an organization to compare pay rates for different jobs with what rivals and the wider market pays for similar jobs.  Similarly, benchmarking enables a company to offer competitive salaries and perks better that what rivals pay which reduces employee turnover and improves motivation levels (Voordt & Per, 2018). In addition, benchmarking enables a company to attract top talent in the industry and retain it as wells as gain in-depth knowledge on the benefits and compensation field which enables it to develop an informed compensation and benefits policy to enrich the human resources management function. Benchmarking also enables an organization to   understand areas that competitors excel in the industry and hence develop a competitive strategy to counter them (Voordt & Per, 2018).

Even though benchmarking offers obvious benefits, it also has various minuses/ demerits.  One of the disadvantages of benchmarking is that the company could have a hard time attracting talent if it obtains and uses bad market data to set pay scales. If the data collection process is not carried out professionally and effectively, the company could end up with misleading or erroneous data. Bad market data could be due to the use of a sampling technique which results in a population sample that is not representative of the entire population. Data gathered using such a sampling technique is usually unreliable and erroneous (Thom & Reilly, 2015).  Relying on bad market data to place recruitment advertisements in print or electronic media could damage an organization’s reputation. For example, if an organization advertises for jobs with salary rates which are either ridiculously low or unreasonably high, the organization would be ridiculed within the industry.  Management of the company would be viewed as either negligent or grossly incompetent (Voordt & Per, 2018). Risk averse investors would exit the company which would eventually affect the revenues of the organization. Stakeholder activism would also result as activist stakeholders would start agitating for removal of the current management team.  It could also be difficult to lower salaries in cases where the organization employed staff using unreasonably high pay rates and wish to correct the mistake. Attempting to cut pay rates to correct a mistake in recruitment and selection could create reputation risk for the company (Laundon, Cathcart & McDonald, 2019).

The Pros and Cons of the Internal Competitiveness Strategy at Gore

            The internal competitiveness strategy at Gore involves a process where associates on the same team rank each other based on individual assessment on how each associate contributed to the organization’s performance during the year under review.  The internal competitiveness strategy at Gore provides various advantages. Firstly, the process is participatory as team members provide a numerical ranking and to support their rankings of each other, they can provide supporting comments (Pati & Lee, 2016).  The process enables team members to identify strengths or areas of improvement of each associate they are charged with ranking. Internal competitiveness strategy is used to determines pay raises which enhances transparency and fairness in the manner pay is awarded. The process also enables the company to identify gaps in skill sets within teams. The strategy enables the organization to identify training needs and to plan the types of training that needs to be carried out to plug the skill gaps identified. In addition, the strategy is open to each member of the team and information obtained at the end of the process is more relevant than information that could be provided by external parties (Pati & Lee, 2016).

            One of the disadvantages of the internal competitiveness strategy at Gore is that team members could influence each other to get higher rankings which would result in undeserved pay rises. Unhealthy competition could also result among team members due to the transparent nature of the process. Team members could end up focusing on delivering more quantitative work than qualitative work to the detriment of the overall survival of the organization. Team members assessing their colleagues could use the process as a tool to influence their colleagues to their advantage which could defeat its purpose (Adewunmi, Iyagba & Omirin, 2017). 

Whether Gore can achieve its Goals of Internal Fairness and External Competitiveness         Gore can achieve its goals of internal fairness and external competitiveness with the two approaches used due to various reasons.  First, the external competitiveness process ensures that the organization obtains pay scales for jobs in other companies comparable to jobs that it offers.  In this way the company will be able to set pay scales that are either above the industry averages for each job or similar with similar jobs in the market (Thom & Reilly, 2015).   The organization will therefore be competitive in the job market. As far as internal fairness is concerned, the process of associates assessing each other encourages participation among team members. Due to the fact that the process is participatory, team members end up viewing each other as partners instead of competitors. Associates will tend to view each other as members of the same family which could lead to improved team work. Since each team member will be assessed by another team member, the process will end up being viewed as fair and transparent (Pati & Lee, 2016).

Whether I would want to work for this Company and the Underlying Reasons

            As working for this company is concerned, I would want to work for it due to the following reasons. First, the fact that the company does benchmarking for each job it offers with similar jobs in the market, would ensure that my work is well compensated. Employee turnover is obviously low which indicates that there is job security in the company. Second, I would want to work for the company because it is run as a family business and team work is prioritized. Certain job related issues such as burnout or work related depression would be minimal.  The next reason is that it appears that performance measurement is done fairly and transparently.  Biasness in performance measurement is therefore eliminated. I would work with is company also because it offers opportunities for career growth. Internal process of internal fairness would ensure that my weaknesses are identified and my skill gaps are also noted. I would use that information to find a trainer who would assist me to fill the skill gaps and mitigate the weaknesses identified during assessment by my colleagues.

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