Running head: ANNUAL OPERATING PLAN

Annual Operating Plan

Name
Institution
Date

ANNUAL OPERATING PLAN 2

Despite the fact that the resort was meeting the areas listed in the sales lead, the
conference had some effects on some areas of the resort. Particularly, the most affected area was
the human resource. Operation management hinges heavily on human resource. This is because
most of the operations are conducted or carried out by the employees and the management team.
Considering the fact that many customers were attending the conference, coupled with the fact
that the same customers were coming to take long time in the resort, it is clear that there was
need for more motivation for the employees as well as the management so that they could offer
the best service.
The conference confirmed that the resort needed to bring new strategies for motivating
the both the employees and the management team. This will ensure that they offer the best
services, which were in high demand during the conference. This is true since the operations
during the conference were quite demanding. They could easily become tired without
motivation. Because of this, one of the strategies for motivating the employees involve the use of
a proper compensation strategy.
The compensation of employees based on their performance can be defined as that kind
of pay strategy where the evaluations of the performance of the individuals have great influence
on the amount of salary increase or bonuses to be given to each worker. A properly functioning
pay performance is the one that has a number brings a number of things to the company. The first
thing is that for the outstanding performers, they will always get the greatest rewards meant to
acknowledge their great contributions as well as to motivate and encourage them so that they can
continue performing highly (Crawford, 2008).

ANNUAL OPERATING PLAN 3

The second thing is that for the average performers; they will always get substantially
smaller salary raises. These bonuses are meant to encourage these workers to work harder to
achieve bigger salary increment in the future. Lastly, for the poor performers, what they normally
get is no increase. The reason for this is to persuade them to do something that can improve their
performance.
When it comes to rewarding the accomplishment of the desired company results,
compensation of the employees is a very important motivator. Money is, in fact, considered as a
strong source of motivation. At the same time, it is argued that salary increment can only be
motivating if the employees are expecting the next pay increment. For instance, one can try to
imagine the effect of a situation whereby a worker has reached his or her peak point in the salary
range. When the desired objectives are achieved in the company, the effectiveness of the
organization is going to be enhanced. The enhancement of the organizations effectiveness will
translate to higher chances of success in the organization. Compensation strategy is therefore, set
in every company or organization in order to strengthen the culture of the organization, which is
deemed desirable by the management. This desired culture is always enabling in the organization
since it has direct link with the organizations performance. Consequently, there should be a
reflection of the companys strategic objectives in the compensation policy adopted.
Therefore, the objectives of the organization must be clearly defined so that it can be
possible to come up with an appropriate compensation strategy, having the potential of leading to
the achievement of these objectives. Once the decision has been made concerning the
compensation strategy, it has to be communicated to everyone. This is because poor
communications have been found to render the good decisions ineffective in achieving the
organizations results. There are two types of compensation rewards. These are the monetary and

ANNUAL OPERATING PLAN 4

non-monetary. Monetary compensation include such rewards as retirement benefits, holidays,
health benefits, medical benefits, commissions, bonuses, and salary increment.
There is need for the organization to make use of full use of the compensation strategy.
One of the good uses of the compensation strategy is that of using it to retain or attract competent
people to the organization. This can be achieved by offering these employees a salary increment
that does not go below the market rates.
Secondly, in case the organization wants to achieve the best customer service, the secret
lies in rewarding the behaviors of the employees that produce outstanding service. In order to
expect good performance, the organization has to ensure that it gives the high performing
employees some salary increment or bonuses. This is because it is most likely for the employees
to make the conclusion that there is insincerity and unfairness in the management of the
organization (Veneeva, 2011).
When it comes to the determination of the rates of pay, a number of ways may be
adopted. Pay increment might be done based on the length of time that the employee has spent
working for the organization. This kind of compensation is seniority-based. Consequently, with
this seniority-based pay increase, the company will have given a good motivator to the employee
for retention purposes. The performance is not being rewarded in this case (Weber & Rynes,
1991).
The second way of pay increment is the performance-based pay. The objective of this
kind of compensation is to give the employees the motivation of performing better. This strategy
is gaining popularity in a situation whereby the employer and the employee make an agreement
on the job objectives and performance standard at the beginning of a particular period. In most

ANNUAL OPERATING PLAN 5

cases, this happens at the beginning of a given year. The effect of performance-based pays
normally varies depending on the time, as well as the situation. The last way of giving pay
increases is the one that is based on the knowledge and skills that are job-related. The intention
of this kind of pay increment is to motivate the employees so that they can acquire new
knowledge and competencies, and gain additional skills. This kind of pay is known as
competency-based pay and it does not reward employees for the work they are doing, their
seniority or job title (Waldman & Gibbons, 1999).
The compensation strategy should be in such a way that the compensation objectives are
aligned with the business objectives of the organization. Salary increment is therefore, part of the
compensation strategy plan. Salary increment ensures that the contribution of the employee is
recognized so that the objectives of the organization are accomplished. Consequently, an annual
salary review is normally conducted so that any employee who merits the increment gets it. It is
not justifiable to give salary increase to an under-performing employee. In fact, a policy
terminating the employment of the workers whose performance is under five percent has been
implemented by some organizations (Tremblay, Sire & Balkin, 2000).
Regarding the size of salary increase, it should be done in such a way the merit increase
thought to be important and realistic by the employees is given as a good motivator for better
performance. In this case, the company should ensure that its best employees are rewarded
adequately with an amount that is sufficient to motivate them. In addition, it is also important for
the company to ensure that its performance review is very effective to minimize the chances of
biased or wrong decisions being made in the performance appraisal (Waldman & Gibbons,
1999).

ANNUAL OPERATING PLAN 6

Pay increase may also be implemented based on promotion. On promoting an employee,
the company may decide whether to give or not to give him or her, a huge pay increase. This is
because there is no justification for paying an overpaid employee a huge promotional increase.
All the relevant matters should instead be considered before making the decision. For instance, it
is important to consider the pay parity with employees performing similar tasks in the same
category (Tremblay, Sire & Balkin, 2000).
Lastly, it is not recommended that across-the-board increases are given in the
performance-based pay. This means that the non-performers, the average performers, and the
outstanding performers should be differentiated to come up with the best way of rewarding each
accordingly (Weber & Rynes, 1991).

ANNUAL OPERATING PLAN 7

References
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the National Resident Matching Program. Journal of Economic Behavior &
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Karadeniz, M. (2009). Product positioning strategy in marketing management. Journal of Naval
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Survey of UK and European Marketing Academics.Journal of Marketing Intelligence &
Planning, Vol. 13, No. 9, pp.4 15
Tremblay, M., Sire, B. & Balkin, D. (2000). The Role of Organizational Justice in Pay and
Employee Benefit Satisfaction, and its Effects on Work Attitudes.Group Organization
Management September 2000 vol. 25 no. 3 269-290
Waldman, M. & Gibbons, R. (1999). A Theory of Wage and Promotion Dynamics Inside Firms.
Quarterly Journal of Economics, 114, (4): 1321-1358.
Weber, C.L. & Rynes, S.L. (1991).Effects of Compensation Strategy on Job Pay DecisionsThe
Academy of Management JournalVol. 34, No. 1 (Mar., 1991), pp. 86-109.