Addressing Compensation and Compensation Problems Essay

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Nike Inc. is an America multinational company with engagements in development, manufacturing, design, and global marketing of equipment, apparel, footwear, services, and accessories. The firm has its headquarters in Beaverton in Portland metropolitan region. The company remains part of the largest apparel and athletic shoes supplier in the world. The company is a notable manufacturer of different sports equipment reaching a revenue mark of U.S.$23.1 billion in 2012. The year 2012 was illustrated by the employment of close to 44,000 individuals across the world. Further, the brand was estimated to be at the value of $19 billion that made it a valuable brand within other sports businesses. Nike was developed in 1964 under the name Blue Ribbon Sports (Farrell, 2009).

The founders were Phil Knight and Bill Bowerman who later adopted the name Nike, Inc. In 1971. The firm took the name against the Greek meaning of 'goddess of victory'. Most stores market their products in the Nike brand among other subsets like Nike Skateboarding, Nike+, Nike Golf, Air Jordan, Nike Pro, Converse, Hurley International, Brand Jordan, and Nike Dunks. The firm owned the Bauer Hockey from 1995 to 2008 with previous interests in Umbro and Cole Haan. Additionally, manufacturing equipment and sportswear led the company in operating retail stores through 'Niketown' title. Nike sponsors different high-profile sports teams and athletes across the world through its highly identified trademarks and logos like the "Just Do It" punch line.

Compensation Issues

Recently, Nike has faced numerous challenges in the determination and implementation of proper mixes of the executive judgment coupled with quantitative risk procedures. Even as quantitative risk measures face countless limitations, it is not an implication that other quantitative measures are not used or are not at risk of being judged. Properly governed Nike departments use risk decisions across multiple budget risk-taking levels within its business units. Measures of quantitative risk avail the necessary support for different decisions of a substantial judgment amounts as used. Executive proposals and sustainable judgments are required in the management of the firm's compensation risk posture (Hirsch & Estreicher, 2009). However, there are significant judgment amounts that are based on elements of systems that require risk-adjusting compensation.

In the end, risk adjustment becomes an uncommon feature where the scope of best practices allows for a combination of quantitative and judgment measures for the risk-adjusting compensation programs. Nike has faced difficulties in the incorporation of different forms of risk upon which the measurements are within early stages. The techniques involved include liquidity and reputation risks (Sirkin & Cagney, 2014). The difficulty does not issue reason for ignoring the risks. The levels of difficulty in safeguarding the fairness for compensation adjustments have led to consistent internal wrangles in Nike. The levels of danger in which quantitative measures are distorted through self-interested employees seek to influence the overall measurement process unduly.

The other challenge faced by Nike in attaining sound compensation practices is that particulars of approaching risk-adjusted compensation are not clear to financial supervisors and firms. However, details are availed on how compensation can be earned through essential sound practices. In the medium scope, Nike should experiment viable compensation options. The visions of possible alternatives promote the emergence of discussions for market participants and experts (Hirsch & Estreicher, 2009).

Recent practices have not had the consistency with principles of compensation outcomes becoming symmetric based on risk outcomes. The focus results from bonus compensation components that are based on variable upward responses for good performance as compared to downward response of poor performance. The special focus is based on the poor performance in negotiating for better pay packages. A broad region of losses within the firm has swapped most bonuses for employees where firms continue developing significant portions from the boom year levels. The scope of bonus pools in the firms showed inertia as compared to the economic performance (Upadhyay, 2009). Nike has a justification of argumentative debate on employees needing incentives to work effectively in hardship areas. The business units and employees perform better within extreme situations within the firm and employees move towards other firms where bonuses are below recent levels. Most business units and individual employees receive minimal bonuses on condition that their performance levels are elevated relative to competitors. Punishment is unavoidable in case the business lines generate large losses.

The company has had trouble in enshrining requirements in the dispute mediation process. The company welcomes gradual and strategic compensation reforms within the corporate governance system.

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Some of the revised policies allow the workers' compensation interest to enter into litigation through mediated processes (Sirkin & Cagney, 2014). However, the case differs in cases where the top leadership finds good cause to eliminate the mediation approach. With the newness of requirements of the mediation process, Nike has current information regarding effects of their mandate as well as volume and nature of cases. However, the resolution allows the Commonwealth to diversify on the mediation process irrespective of the mediation process producing materially different implications as compared to the adjudication of similar cases. Nike has an ideal position of tracking the various forms of measures that determine the effectiveness and could help the policymakers in making reviews of future proposals (Farrell, 2009).

The company refines compensation systems through expanding its current qualifications requirements. In some franchised stores, women complain of facing barriers and the heavy reliance on advancement strategies that are substantially different from the ones the male counterparts encounter. Discrimination towards women is manifested in forms such as wage gaps, job segregation, sexual harassment, the career development denial (Biswas, 2012). The suppression occurs in lack of mentorship opportunities and reduced quality of performance evaluations. Stores in Asia countries have gender alertness and bias against women working away from the home calls and in the additional education on workplace inequity. Further, Nike does not take the appearance of an outlier in comparison with other companies on several litigation measures, litigiousness, and costs. The employee performance data allows for currency in availing focus towards litigation speed measures as well as the cost implications as compared to the quality of outcomes (Pynes, 2008).

In addition, the litigants' experience of as justice system participants comes into play. The case of workers' compensation on medical care promotes future reforms regarding dispute resolutions and the required elements of balancing considerations relating to quality, outcomes, and processes (Jensen, McMullen & Stark, 2007). The Nike Company has expanded its human resource efforts in the main system for purposes of collecting detailed outcome information on dispute resolution regarding initiatives of release agreements and mandatory mediation and compromise. The outcomes and variables include providing new and more useful insights for the policymakers.

Recommendations

Nike can use stock options as an alternative motivation and compensation platform. Shareholders discourage such application of time-vested-only stock options as opposed to using performance as the lead variable. However, there are significant components for executive compensation with arguments of options encouraging inappropriate risk-taking as well as leading to unintended outcomes on rewards. The implications are not aligned with long-term employee performance (Estreicher & Reilly, 2010). The other criticism against stock options includes the fact that they allow top management to continue participating in share performance upsides without suffering consequences on a downside. However, recent research highlights that stock options value is consistent and reflects of market-specific and company-specific factors.

In the case, Nike uses stock options; the firm will de-emphasize to favor other equity-linked compensation forms, as well as serious consideration given to the introduction of performance-vesting provisions. All forms of performance-vesting provisions have an alternative of continually mitigating risk for the rewarding of executives based on share performance. The driving factor is past management's control such as the booming commodity markets. Management boards are mindful of the minimization of dilutive impacts for stock option programs (Pynes, 2008).

The nest alternative includes payments in cases where targets have been exceeded. In the event, that Nike's employees have hit their performance targets through a significant excess, there are compensation alternatives targeting the levels of warranted and provided compensation. The approach is accompanied by similar reductions due to performance levels going below the target. Nike must have a symmetry and balance across the upside and downside for the performance-based approaches to compensation. In alternative cases, negative impacts on company's management and failure to attain performance targets become greater as compared to positive implications of achieving it (Upadhyay, 2009). Consideration is given to severe compensation consequences in terms of failure to achieve targets relative to benefits of attaining it.

The third alternative includes development of recoupment policies. For Nike, paying bonuses to executive due to apparent attainment of performance metrics across the particular year allows them to be clear especially on the metrics that were not previously achieved. The firm should continue ensuring there are specific rights in requiring return of bonuses and cancelation of unvested compensation rewards (Hirsch & Estreicher, 2009). The implication includes typical.....

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