Petro-Canadas Total Compensation Strategy and Program - Research Paper Example

? Petro-Canada's Total Compensation Strategy and Program Contents Introduction 4 Overview of the Company 4 Compensation Program for Applications Analyst I 5 Cash Compensation 5 Benefits 5 Medical Insurance 6 Income security 6 Time off benefits 7 Pension plans 7 Life Insurance 7 Other benefits 8 Comparative analysis 8 Internal 8 External 9 Conclusion 9 Appendices 10 Appendix 1 10 Reference 13 Bibliography 14 Introduction It is imperative that large organizations are associated with better salaries while the smaller ones offer lower salaries in comparison to their counterparts. Petro-Canada accounts for one of the leading integrated oil and gas companies. The project seeks to explore the total compensation programs and strategies formulated in this company. For this purpose it analyses the compensation structure and package of Applications Analyst I who belongs to the Department of Information Systems. However, the report analyses the above compensation structure before the occurrence of the merger between Petro-Canada and Suncor Energy. The idea is to analyze the compensation package of this employee to evaluate the same for the organization. Overview of the Company It is important to provide an introduction about the company before studying its compensation structure. Petro-Canada is a public organization producing oil and gas organization and taking part in all of the upstream and downstream operations. The company is known for exploring for and producing energy not only locally but also internationally. It has as many as 1,323 retail outlets which supplies petroleum products and services across the nation (The Canadian Encyclopedia, 2011). Headquarter of the company is located at the in downtown Calgary in Alberta. In the year 2008, the total revenue of the company was $27,785,000, while its employee strength was 6,088 (Petro-Canada, 2008, p.110). The oil and gas industry in Canada happens to be highly competitive having strong competitors like Encana etc. The objective to increase strength and emerge as a larger oil and gas company the company decided to merge with Suncor in the year 2009. However, now it operates as a subsidiary under the parent company, Suncor Energy (Suncor Energy Inc, n.d). Compensation Program for Applications Analyst I The compensation package received by an applications analyst I is quite favorable (Please refer Appendix 1). Cash Compensation The cash compensation received by an Applications analyst I in Petro-Canada is CDN$75,000-85,000 (Tang, 2010). This is a much higher amount as compared to the average market rate which is $50,795 (Pay Scale, 2011). Thus it can be said that the company has a lead policy in this regard. Apart from having an attractive salary the company also has a scheme of sharing profits with employees which happens at the end of each fiscal year. The amount of the profits shared with the workers depends on the performance of the company at that financial year. As per the rules of the company an Application Analyst I is able to earn an amount of 10% of his base pay as profit sharing. In this way an employee could earn as high as 15% to 20% when the company has a successful performance in a year (Tang, 2010). Benefits Every staff in the company is subjected to the same comprehensive benefits and there is no biasness in that. Some of the benefits are determined by the company; however certain benefits schemes are subjected to more flexibility by the employees. Employees have certain amount of liberty to decide plans for the schemes. Thus, a flexible policy of benefits was developed by Petro-Canada to provide workers with the flexibility to choose their benefit coverage as per their choice. Beginning from the day the employee starts working with the organization, he is entitled to the following benefit schemes. Medical Insurance Companies generally provide benefits regarding the medical expenses of the employees. This type of benefit forms a major part in employee benefit policy. It has often seen that if the employees’ get motivated if the company shares the medical expenses of the employees. Petro-Canada’s employee benefit policy also includes benefits regarding the employee’s medical expenses in form of medical insurance. Petro Canada contributes about fifty percent of the total expenditure of the premium toward provincial health insurance of the workers and bears the total cost regarding the Supplementary Health Care Plan of employees. This type of plan generally covers the expenses regarding the prescribed medicines, room charges of partly private hospitals etc (Petro-Canada, 2008). Income security Petro Canada has also concentrated in providing income security to its employees. Many times it has seen that the employees who met with an accident or cannot carry on the work for a long time due to prolonged illness or any other major issue. During this time the employee generally does not get paid as they cannot resume their official duties for a very long time. Hence during this period they often face hardships to meet up the necessary expenses. To secure the employees from this type of situations the company offers many types of plans for income security like the Short Term Disability Plan and Long Term Disability Plan. The mentioned plans are provided as per the period of service of the employee. The income under Short Term Disability Plan is provided for twenty six weeks, during this period the employee is generally provided total of seventy five percent of the basic salary. If the absence from work is more than twenty six week then the employee will receive $6000 per month under Long Term Disability Plan (Petro-Canada, 2008). Time off benefits Time off benefits signifies the benefits given to the employees as vacations. This is often given to the employees to give a break from the regular schedule which will ultimately boost up the morale of the employees. Petro-Canada also provides time off benefits to the employees. as per the market average generally many companies provide three weeks’ vacation which is paid by the company itself. In this regard Petro-Canada provides three to six weeks of vacations to its employees in a year which is much higher than the industry average (Pay Scale, 2010). Pension plans One of the major benefits which improves the morale of the employees and also helps to improve the job satisfaction level of the employee is the security of the future income. In this regard the companies often provide a number of pensions plan to their employees. Petro Canada also provides pension plans to its employees namely Defined Benefit Plan and Defined Contribution Plan. Like the Income Security Plan, the company’s contribution towards this plan is also decided on the basis of the service period of the employees which generally ranges five percent to eight percent (Petro-Canada, 2008). Life Insurance Another important benefit which is generally provided by the companies under employee benefit scheme is policies regarding life insurance plans. In this regard the Petro Canada also provides benefits toward the life insurance of the employees. Petro Canada bears the total expenses regarding the life insurance premiums of the employees and also of their dependents. The insurance coverage provided to the employees is equal to the twice of the salary of the employees. Moreover the employees can also take additional coverage of life insurance (Petro-Canada, 2008). Other benefits Petro Canada provides a lot of benefits to its employees. Apart from the benefits like medical insurance, life insurance, income security, paid vacations etc as mentioned in the earlier sections this company also provides some other additional benefits to its employees. Petro Canada provides scholarship like Dependent Scholarship Plan to the dependents of the employees. Apart from this the employees are also provided other benefits like product discount, relocation programs etc to its employees (Petro-Canada, 2008). Comparative analysis Internal In this section the compensation package of the team leader of Information Service Department have been compared to that of the employees working at supervisory level. Both the employees in these two positions receive almost same type of benefits. The benefits mentioned in the previous section like pension plan, medical insurance, life insurance, income security etc are provided to the employee of both the positions. This may be due to the fact that the benefits provided to the employees are mostly general in nature and is required by all types of employees. More over the benefits like income security and pension plans are offered on the basis of the service period of the employee therefore these benefits cannot be differentiated on the basis of the job position (Petro-Canada, 2008). The employee compensation package can only be differentiated on the basis of the basic salary of the employees. The team leader’s basic salary is almost 15% higher to that of the other employee’s (Tang, 2010). External In this section the compensation package of applications analyst I of Petro Canada have been compared with that of the other applications analyst I in Canada. The employee working in applications analyst I in Canada receives a base salary which ranges between $44010 and $52866. The median base salary is about $ 49209 which is much lower than that of the Petro Canada. Hence the compensation package in terms of base salary provided by Petro Canada is much higher than the country average (Campbell Cohen, 2011). Its competitor Encana provides its employees pension plans, medical facilities, disability benefits, insurance etc which are more or less similar to that of the Petro Chemicals. Like Petro Chemicals, it also provides $2500 award to the eligible children of the employees under ‘Student Award Program’ (Encana, n.d). Conclusion After analyzing the compensation plan of Application Analyst I of Petro Canada from various point of views like the basic contents of the compensation plan, comparison with the compensation plans on the other position of the company and throughout the industry it can be concluded that Petro Canada’s compensation plan of Application Analyst I is one of the superior compensation plan among the industry average of the country in terms of base salary. Other benefits which are provided to the employees are more or less same among the other job position and in other companies. Appendices Appendix 1 Total Compensation Package for Application Analyst in Petro-Canada Cash Compensation Annual Salary CDN $75,000-85,000 Profit-Sharing At least 10% of an employee’s annual salary or earnings Benefits Health Care Plan Paid 50% of the cost of provincial health premium and 100% of the Supplementary Health Care premium Dental Plan Paid 100% of the premium Short-Term Disability Plan Continued 100% or 75% of an employee’s base salary for up to 26 weeks Long-Term Disability Plan Paid a maximum of $6,000 monthly Vacation Time 3-6 weeks Flex Days 1 flex day each month, to a total of 12 flex days annually Holidays 12 recognized holidays per year Pension Plan Defined Contribution Plan-Company contributed from 5% to 8% of an employee’s earnings Life Insurance Paid 100% premium of the basic life insurance for employees and dependents Offered optional life insurance for employees and dependents Miscellaneous Benefits Dependent Scholarship Plan Day Care Services Product Discounts Employee Assistance Program Relocation Program Reference The Canadian Encyclopedia. (2011). Petro-Canada. Retrieved on November 11, 2011 from http://www.thecanadianencyclopedia.com/index.cfm?PgNm=TCE&Params=A1ARTA0006250. Petro-Canada. (2008). Your Employee Benefits: Reference Guide. Petro-Canada. Tang, T. (2010). Chi Tang. BIConsultant. Campbell Cohen. (2011). Canada Salary Calculator. Retrieved on November 13, 2011 from http://www.canadavisa.com/canada-salary-wizard.html?narrowdesc=IT+--+Computers%2C+Hardware&narrowcode=IT04. Encana. (No Date). Careers. Retrieved on November 13, 2011 from http://www.encana.com/careers/. Petro-Canada. (2008). Petro-Canada Annual Report 2008. Retrieved on November 13, 2011 from http://www.suncor.com/pdf/2008_annual_report-e.pdf. Suncor Energy Inc. (No Date). Energy for the Future. Retrieved on November 13, 2011 from http://www.suncor.com/en/about/739.aspx. Pay scale. (2011). Salary and Benefits Free Report. Retrieved on November 13, 2011 from http://www.payscale.com/mypayscale.aspx?pid=3a9503fe-48b0-4661-afee%ACca4c7e1e99b4. Pay Scale. (2010). Average vacation. Retrieved on November 13, 2011 from http://www.payscale.com/mypayscale.aspx?pid=3a9503fe-48bO-4661-afee-¬ca4c7e1e99b4#Average Vacation Overall. Bibliography Thomason, T. Schmidle, T. P. and Burton, J. F. (2001). Workers' compensation: benefits, costs, and safety under alternative insurance arrangements. USA: W.E. Upjohn Institute. Barbeito, C. L. Bowman, J. P. and Applied Research and Development Institute International. (1998). Nonprofit compensation and benefits practices. USA: Wiley. Ellig, B. R. and American Compensation Association. (1985). Compensation & benefits: design and analysis. USA: American Compensation Association. Read More