Total Compensation Plan is aimed at discussing and identifying fringe benefits, salaries and wages for professional workers. It also caters for non-exempt service workers for various subcontractors. The Total compensation plan also complies with all legal requirements. It would include the paid vacation days, retirement contributions, and contributions for medical insurance. The development of total compensation plan depends on the state of economy (Kaplan & Atkinson, 2015). It should also meet all the employees’ requirements in order to help them focus on the job. The paper will discuss total compensation plan for Ford Motor Company, which is a competitor of General Motors Company.

The total compensation plan for Ford Motor Company should support the key objectives of the organization. In this respect, it should support sustainable business for the firm. The plan should also promote the employee retention. Similarly, the total compensation plan should support the firm objective of maintaining morale among its employees (Kaplan & Atkinson, 2015). On the other hand, the compensation plan should restrict turnover of employees. One of the key objectives of the organization is to design measures to retain its critical employees. In certain departments, a single employee has a huge impact on the success of the whole firm. However, the employee turnover for one individual may risk the firm’s success in the future. Therefore, a better compensation plan should be designed in order to retain top talents but limit the employee turnover. Measures should be put in place to prevent underpaying or overpaying of workers. In such cases, raise in salary should only be because of greater results. According to Kaplan & Atkinson, (2015) huge compensation does not act as a motivator or satisfier.. However, compensation acts as dissatisfier when an employee thinks he/she is underpaid (Kaplan & Atkinson, 2015).

The compensation should also cater for current issues and trends as well as prediction of future trends. The Ford Motor Company should reward top performers with better compensation plan in order to get the attention of poor performing staff. Therefore, a system that acknowledges better performers cannot reward all employees at the same rate. The total compensation plan should serve as a communication tool to all staffs about the achievement rewards and their goals and expectations (Kaplan & Atkinson, 2015). The total compensation plan should increase with productivity. Economic theory suggests that due to competition among employers, workers must be paid in terms of their productivity. If Ford Motor Company underpays its employees with regard to their productivity, they are forced to go to higher-paying competitors. On the contrary, if a firm pays more to employees than they do produce will lead to inadequate returns, which can result to bankruptcy in the future. The firm should therefore, track the productivity of its workers overtime in order to develop a compensation plan (Ghazanfar, Chuanmin, Khan, & Bashir, 2011).


The total compensation plan should also be based on internal and external equity. Internal equity means that workers must be compensated fairly as compared to other workers in similar jobs. External equity means payments of employees relative to other competitive structures of payments (Ghazanfar, Chuanmin, Khan, & Bashir, 2011). Compensation plan that considers internal and external equity promote the acuity of fairness. Additionally, the organizational culture should be a critical factor to promote the business success. Therefore, the organizational culture should promote fairness. When workers see equity in terms of equal pay for similar jobs, they are likely to feel appreciated. They also have a higher chance of respecting the guidance and directions of their leaders. Internal and external equity also helps to promote consistent standards of performance. Similarly, fair payment reduces claims of inadequate motivation and unfair treatment as cause of poor performance.

A wage management process and rationale should be put in considerations when developing total compensation plan. For instance, job experience and skills should determine the placements and salary after hiring. Wage management is important because it provide guidelines to be adhered to and limit compensation plan that increases financial burden to the organization (Kaplan & Atkinson, 2015). Wage management process and rationale ensure that there are flexible provisions to facilitate implementation of critical work. The process involves crucial balance between employees’ considerations and organizational needs aiming to produce an optimal compensation plan. The Ford Motor Company should perform job analyses in all departments aiming to analyse the effective alignment of various roles. An effective compensation plan is developed in terms of skills and experience levels needed in certain job functions. Job analyses also identify inefficiencies and inconsistencies, which leads to review of responsibilities in the firm (Ghazanfar, Chuanmin, Khan, & Bashir, 2011). Following review, the job description is analysed to know if it need to be changed or not. Review of payment structure will also to standardize the compensation plan of the firm and reflect the value of different jobs (Kaplan & Atkinson, 2015).

A total compensation plan should have an effective retirement plan. It is important for the Ford Motor Company to initiate a defined contribution plan. In this case, a certain amount of finances is directed towards retirement plan since the day of admissibility. The employee and employer funds both the retirement plan. The amount of contribution depends on a proportion of worker’s salary. However, it may be a flat contribution provided to the retirement plan on regular basis (Ghazanfar, Chuanmin, Khan, & Bashir, 2011). The funds are retained in retirement plan account. After retirement of employee, the distribution of these funds depends on the amount of funds contributed by employer and the amount of saved by the employee. Moreover, the payment of retirement should be contributed by the performance of investments.

Financial conditions of the Ford Motor Company also affect the total compensation plan. Firms develop compensation plans that help them to remain competitive in the business. Therefore, they use factor such as skill-based pay, which rewards workers based on the number of skills they have rather than job type. The compensation plan should be determined by market adjustment. Therefore, the organization should review salaries depending on available market data (Kaplan & Atkinson, 2015). Moreover, the payment of bonuses is determined on the ability of the organization to pay. The financial conditions and the ability of Ford Motor Company to pay incentives affect the compensation plan. Firms use incentives to compete for top talents that they may not be able to hire. Incentives are used to complement the fringe benefits and base pay. They are also used as reward for better performance and commitment (Ghazanfar, Chuanmin, Khan, & Bashir, 2011).

Effective communication on compensation increases awareness of the importance of total compensation plan. Both the employees and their leaders should be aware of the new compensation plan of Ford Motor Company. The information on total compensation plan can be communicated through memos, newsletters, booklets or statements. The method of communication should ensure that there is consistent message, which act as reference materials. Presentation through workshops and meeting enables interactions so that concerns are solved instantly (Kaplan & Atkinson, 2015).


When assessing the salaries and wages in an organization it is crucial to know the economic factors in the market, the number of employees and financial capacity of the organization. Job analysis helps to determine the placement. The salaries are determined by the job relevant experiences and skills that influence the organization.