Jinnikins Jeans has carved out a reputation for itself based on its easy informality of business and product style. But this uniqueness of style is also sometimes the undoing. With respect to HRM practices, especially when it comes to formulating employee compensation programs, the model of ad hoc decision making that had prevailed in the early days can prove counterproductive.
Compensation policies of companies across industries and domains usually have these two facets: firstly, the fixed financial recompense and performance-based incentives; and secondly, the prospects for career growth and promotion.
It is fairly certain that the older reward models employed by Jinnikins ware inadequate in meeting the new visions and aspirations of the company. In the older model, there is an element of randomness and spontaneity of decision making. Breaking away from this tradition, the new HR Director, Etty, took the right measure of applying course correction. She systematized the financial remuneration programs and made it more comprehensive. The new model does look more attuned to the broader business objectives of the firm.
Most of the components of the new standard package are based on sound logic. For example, the policy to review employee salary every six months is very sensible. Likewise, the endowment of annual salary increments based upon a fixed percentage is well reasoned.
The importance of perks and other benefits is not lost on Etty. The choice of 28 holidays per year for the first five years and 32 days thereafter follows industry norms. These holidays are separate from standard statutory public holidays and other special days in the religious calendar. All staffs from the lower rungs can avail of car loans and those from the ranks of middle and top management are given company cars.
There are other auxiliary remuneration programs that fit in well with the new vision of the company. For example, the year-end bonus program as a percentage of company profits speaks of an egalitarian ethos. Likewise the performance linked sales bonus is a great motivating device for the sales force. Considering how, ultimately, it is marketing and sales that bolster the bottom line, this initiative is quite consistent with the business objectives of Jinnikins.
The management has shown over the years that it can act assertively when there is a necessity for financial austerity. This was evident when Jinnikins downsized its staff numbers, which in consequence allowed a reduced price point on its product offerings to All Saints.
Hence, it is fair to come to the conclusion that the current standard package is a much better overall proposition to employees, compared to the somewhat arbitrary decision-making of brothers George and Trevor that had prevailed previously.
In terms of an action plan or policy content for the future, Jinnikins can think of stock options as a method of remuneration. This is a win-win situation, for employees’ own hard work will contribute toward boosting company performance, and in consequence its stock price.
Suze Mathews, 2014, Case Study: Jinnikins Jeans, Faculty of Business Department of Business and Management, Oxford Brookes University