Compensation Practice at ASOS Company

ASOS Company

ASOS is a retail company whose headquarters is located in London, UK, and it deals with cosmetics and online fashion. Nick Robertson and Quentin Griffiths started the company in 2000, and it was known as “As Seen On Screen” before it was changed to ASOS in 2003. By then, the company’s primary target customers were young adults (Wells & Ellsworth, 2016).

Today ASOS Company has shown remarkable growth as it presently sells more than 85000 both own label and branded products through its website ASOS.com (Forbes, 2020). ASOS sells products ranging from accessories, beauty collection, menswear, women’s wear as well as footwear. The growth of the company can be attributed to the efforts made by the human resource department to ensure they are aligned with their mission statement of ‘becoming the world’s number one online shopping destination for fashion-loving 20-somethings’ Wells, J. R., & Ellsworth, G. (2016). ASOS Company has therefore implemented various policies and practices to act according to the mission, keeping up with the pace of its competitors as well as attracting and maintain top talent.

Compensation strategies are essential when striving to attract and maintain top talent in an organization. A compensation strategy helps to outline an organization’s point of view regarding how you will determine the benefits and pay for the employees (Murphy, 2013). Again it allows for the alignment of your compensation resources to the goals of your company, aids in decision making regarding your competitors, as well as the criteria you ought to use when rewarding your employees (Murphy, 2013). As such, the compensation strategies form the foundation for the compensation plan, thus enabling one to make a sound decision about compensation (Murphy, 2013).

Employees in the talent market today have increased bargaining power and can easily access information based on compensation and benefits on the online platforms. As a result, employees evaluate employers based on the information they obtain, prompting them to move to other companies that have better offerings (Sinclair & Tetrick, 2004). As such, compensation practices have an impact not only on the culture of the organization but also on employees’ satisfaction. To avoid losing top talent in organizations, HR professionals are focusing on improving their compensation and benefits strategies and practices (Murphy, 2013).

ASOS, which is a global fashion retail business aimed at offering fashion products to clients within the age bracket of 20 -30 years (Wells & Ellsworth, 2016). The company provides products for both men and women. The compensation strategy of ASOS Company is the total reward strategy (Forbes, 2020). The company pays the employees per hour, salaries, overtime, and basic or commission strategy. The success of any company is the ability to motivate the employees so that they can be able to push towards the attainment of the company’s missions and visions (Wells & Ellsworth, 2016).

The ASOS Company does not only depend on the online resources so that they can be able to understand the market trends, but it has consultants that understand the market well (Forbes, 2020). The consultant will be able to give the best advice to the company.

The company pays all its employees consistent with the percentage that it is recognized in the market and pay within the company. There is no hidden information in the ASOS Company. The company is transparent to its employees, and they are always willing to give information to their employees whenever they need it (Bebchuk & Fried, 2009)

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The company executives understand that if fair and consistent salary payment structures can increase company trust and overall salary satisfaction, it also increases competition among employees (Bebchuk, & Fried, 2009). Reward and financial compensation will encourage good behaviors by the employees, while punishment will help to discourage harmful practices if the employees are involved.  As such, ASOS company offers work performance incentives to the company employees and also help to motivate workers while not diminishing the overall creativity of work. The creativity among the employees will help the company to come up with new ideas in the manufacturing and marketing of the company products and services, thus attracting a huge customer base and increasing productivity (Tropman, 2002).

The company also offers promotions to hardworking employees. It also increases their salaries as their job groups keep on rising from one level to another. Despite the compensation strategies of this company, the biggest challenge is that compensation requires a lot of capital, meaning that the company has to incur a lot of costs (Sinclair & Tetrick, 2004).

Among the best compensation practices in an organization is understanding the budget. As such, the human resource department ought to understand how the budget is structured in accordance with compensation and benefits in a bid to comprehend how the money is going to be spent. Therefore the HR team should regularly conduct a compensation audit to determine if they are needed for change that would impact the salaries to avoid experiencing high attrition rates. 

The company applies compensation strategies to ensure that there are more positivity and reduced negativity to the company. To achieve this, the company plans to communicate and maintains its approach (Lois, Mahoney & Thorne, 2006).

In addition, ASOS Company understands that when the human resource department does not maintain these benefits, then there is a likelihood that the compensation strategy can be challenging to maintain, which means it quickly loses its effectiveness and value. The company also understands what the employees of the company value because the reward compensation strategy is successful when the company is built on the desires and benefits of the employees (Lois, Mahoney & Thorne, 2006).

The strategy is also communicated well because the reward compensation strategy works well if effectively communicated to the employees and loses its effectiveness when the value of the program isn’t communicated in detail to employees. The company empowers the team members within the departments of the ASOS company with enough information through the seminars and training. The training programs will be able to expose the employees to the current markets and market demands. When employees understand this, they will be determined to work hard in order to satisfy the demanding market(Porter & Kramer, 2006).

 Again, ASOS Company practices the reward compensation strategy by planning for both the current time and in the future. There can be a delicate balance in making sure employees are satisfied and that the plan is maintainable long-term, but the ASOS company is determined to make it work for the betterment of the company (Porter & Kramer, 2006).

There are several ways in which laws, labor unions, and market factors impact the company’s compensation practices. The federal laws help to regulate employers, unions, and employees. The laws affect compensation practices because it demands a lot of issues from the employers such as pay rise, promotions, and occupations safety of the employees and the working institution of the ASOS Company. An example is that the employees of ASOS demand for promotions, and more staff that can work for the ASOS Company without straining have led is to incur more cost (Murillo, 2001).

The company also has to budget for overtime workers. The labor laws are designed to safeguard the employees from the exploitation of employers. The laws include; payment of wages Act 1936, The Minimum wages act 1948, The payment of Bonus Act 1965, Equal Remuneration Act 1976, Payment of Gratuity Act 1972 are some of the acts passed in the welfare of the labor, and all the employers must abide by these (Murillo, 2001).

There are powerful labor unions that the members of the ASOS employees are registered in. The labor unions influence the compensation plan of the company because they demand a lot of money from the company (Murillo, 2001). An example is when an accident occurs to one of their members. They believe that the company is not taking care of its member’s health safety. The market also affects the compensation strategy of the ASOS company because when the company does not sell more clothes and make profits, then they are likely to reduce the employee’s salary, and at times, they are forced to reduce the number of employees (Murphy, 2013).

The traditional bases for ASOS companies include the level of education, skills, experience, integrity, and competence. The level of the employees should be promising to the company in that the employees should be able to work professionally and when designing the fashions, then they should be able to offer their time and energy. The employees should also be very innovative so that the designs can be competitive in the market and attract more customers.

When recruiting new employees, the ASOS Company is very keen on personnel who have hand-on skills in the industry so that they don’t have to be trained. Experienced employees are also enthusiastic about their work, and they will help the company to reduce risks during production and packaging (Dickinson, 2006). However, it is essential to provide occasional training to employees irrespective of whether they hired those who have skills in a particular field because there are fluctuations in the market that call for change in the way of doing things to maintain the pace of competitors.

Employees at ASOS are also competent in their work. The company always ensures that the right people are put in the right workplaces. When this is done, the company is assured of high productivity that will be able to meet the market demand and the company’s goals and objectives. Increased productivity encourages investors to invest in ASOS Company, thus creating more job opportunities, and at the same time, they are able to maximize profits. ASOS is a fair and equal opportunity company, and it always ensures that integrity is upheld in all measures. When this is done, the company is able to trust all the systems that are put in place, and there will be no irregularities that will be experienced (Lee, Law & Bobko, 1999).

References

Bebchuk, L. A., & Fried, J. M. (2009). Pay without performance: The unfulfilled promise of executive compensation. Harvard University Press.

Dickinson, J. (2006). Employees’ preferences for the bases of pay differentials. Employee Relations.

Forbes. (2020). ASOS. Forbes. Retrieved from https://www.forbes.com/companies/asos/#5080218a3cb9

Lee, C., Law, K. S., & Bobko, P. (1999). The importance of justice perceptions on pay effectiveness: A two-year study of a skill-based pay plan. Journal of Management, 25(6), 851–873.

Mahoney, Lois Schafer, & Thorn, L. (2006). An examination of the structure of executive compensation and corporate social responsibility: A Canadian investigation. Journal of Business Ethics, 69(2), 149–162.

Murillo, M. V. (2001). Labor unions, partisan coalitions, and market reforms in Latin America. Cambridge University Press.

Murphy, K. J. (2013). Executive compensation: Where we are and how we got there. In Handbook of the Economics of Finance (Vol. 2, pp. 211–356). Elsevier.

Porter, M. E., & Kramer, M. R. (2006). The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78–92.

Sinclair, R. R., & Tetrick, L. E. (2004). Pay and benefits: The role of compensation systems in workplace safety.

Tropman, J. E. (2002). The compensation solution: How to develop an employee-driven rewards system (Vol. 17). John Wiley & Sons.

Wells, J. R., & Ellsworth, G. (2016). ASOS PLC.