The Target Corporation’s Compensation Plan

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Companies and corporations are continually faced with making the decisions regarding how to compensate their employees. Employers want to know that they are executing the right mix of attracting candidates who are highly qualified by offering salaries that are reasonable. There is no particular way to determine what to pay an employee, but there are ethical and fair standards that companies and corporations should abide by when creating their compensation plan. The Target Corporation has since its inception, prided itself on providing some of the most outstanding benefits in the retail arena. Whether the discussion pertains to competitive pay or noteworthy perks, the Target Corporation has some exceptional employee benefits. There are a few areas, however, that could use some improvement.

Joseph Kilmartin, Director of Compensation at, noted that employers should focus on the overall rewards of the position rather than seeking to assess compensation alone. There is a rationale to believe that most employers feel that the only satisfaction that an employee will obtain from them is through the concept of compensation. While this is true, there are other benefits such as bonuses, paid time off and non-monetary incentives that can be factored into the proverbial compensation plan that make working in that company's environment worthwhile. Kilmartin continued to express that it takes a lot for employees to leave a company solely based on salary. Data that he found noted that employees only leave their position if they are offered additional income of about 10% or more and the incentives at where they are going are better ("How Does An Employer Determine Employee Compensation For Increased Retention? " 2013). On the Target Corporation website, the benefits section is separated into five distinct categories: health, financial, social, career and community respectively.  

The Target Corporation adds that they are dedicated to ensuring that the health care coverage that team members and their families are offered is affordable. The eligibility of health care coverage is based on the number of hours worked, the position title and the time in why a team member has worked for the company. In addition to this, there is also a flex spending account for health care that allows individuals working to appropriate a certain portion of their take-home pay to an account that is tax-free. Target also offers Vision Exam and Vision Eyewear Plans that team members become automatically enrolled in when they opt to enroll in the health care plan. The dental plans of Target pertain to the needs of the individual team members as well as their families. Each of the plans under the dental is stated to cover 100% of preventive care and there are plans that cover other services that related to dental and orthodontic work also ("Target," 2013). In evaluating this aspect of the compensation plan of Target, these seem to be acceptable components. With the changes to health care and the ever-increasing costs associated with it, the only area that was deemed needing a change was to make it so health care coverage begins on day one. Why should a team member have to work a certain time frame in order to take advantage of a viable health care plan? It should not matter if the team member is an associate or a manager, health care is essential to all careers and should be a driving element that employees look for in their assessment of a compensation package.

The largest area that was evaluated was the financial benefits. While Kilmartin noted that employees are not solely driven to decide on a career/job based on money, the financial piece is a significant factor in one's decision. Dishman (2011) evaluated the differences in the pay of Target versus Wal-Mart. The financial compensation was as follows for Target: for a greeter/floor sales representative the pay is anywhere between $6.77 to $12.06 per hour; for the cashier position, the pay is between $7.38 to $10.27 per hour; for the Retail Store Assistant Manager, they make roughly $48,003 per year; the Retail Store Manager makes $65, 960 per year; the Retail Pharmacist makes $114, 492 per year; the Department Manager makes $48, 457 per year; a customer service sales associate makes anywhere between $47.34 to $16.76 per hour; and a laborer, freight, stock, material mover makes anywhere between $6.93 to $14.08 per hour (pg.1). These averages are based on 2011 data, but they appear to be suitable for the types of positions when compared to Wal-Mart, a comparable retailer, which is what Dishman did. Hence, it would seem as though the Target Corporation is doing right by their employees in certain instances. The only recommendation/suggestion, in this case, would be to start all hourly positions at $10 base. This is something that companies and corporations can do. It is important given that "nearly one in four makes less than $10 per hour" (Sunshine, 2012) for Target to be above the proverbial fray. If they did this, they would undoubtedly be higher in terms of the retail business and perhaps the leader in financial security for their hourly workers.

There is reason to believe that companies and corporations such as Target develop their compensation structure/plan based on the many different rationales. For the individuals who work hourly, Lewis (2013) stated that employers may be trying to gamble that they can obtain both quality and quantity in work within a certain time frame. This, in essence, inhibits them from scheduling an employee to work beyond 40 hours a week. Since many workers in retail are usually younger and often less experienced, companies opt to use this in their hiring process rather than salaried workers. The salary model for employers is also advantageous for the employer as the company can get the most bang for their buck as the employee can usually work more than the normal hours that they are restricted by under the hourly plan. Lewis continued to say that there are disadvantages to both, as with hourly plans, workers need to feel that they are getting their money as do salary workers (pg.1). This is why it was evaluated that per market consistent compensations that Target could do a little better than they are currently with regard to hourly workers. Here, the discussion comes to employees that make more money tend to work better and more efficiently, and organizational morale is overall more positive. Workers are happier, and "positive emotions appear to invigorate human beings and produce positive causal effects on productivity" (Doward, 2010). 

Other elements of Target's compensation plan were evaluated also. These included their 401(k) plan which is stated on their website to be "one of the best in retail. For every dollar team member’s deposit, up to 5% of their pay, Target matches it dollar for dollar" ('Target," 2013). Target also offers the standard compensation for vacation and holidays as they are "based on length of service, position and hours worked" ("Target," 2013). Paid time off is considered to be another driving factor in an employee working for a company or corporation. Thus, when employers come up with said components of their compensation plan, this component must be advantageous. 

The recommendation/suggestion for Target would be to ensure that vacation versus sick days is defined as these tend to be obscured quite a bit. Often employers "end up granting all the paid time off under the plan and then face requests for unpaid sick time not properly banked for the end of the year. In other words, employees may take more time off as vacation and not save sufficient time for illnesses later in the year" ("4 Tips for Business Paid Time Off Plans," 2010). While this is not necessarily Target's fault in terms of what the employee does or does not do with their PTO, they need to ensure that they are definitive when individuals are brought into the Target family.

An interesting aspect of working in retail is the discount that those who work within it receive. For Target employees, they receive 10% off their purchases. This includes groceries, online shopping, and prescriptions. The discount can also be used by family members also. Target also offers a credit union to assist team members as well as their families in improving their financial wellbeing. Irrespective of an individual's financial history, they can open a checking account that has no monthly fees, be qualified for high yield savings accounts and vehicle and tuition loans ("Target," 2013). When examining these benefits that go with their compensation plan, these are top-notch in comparison to other retailers such as the aforementioned Wal-Mart.

Dishman (2011) stated that the largest disparity between Target and other retailers such as Wal-Mart are their bonuses. The article stated that Wal-Mart "is much more generous for some positions offering its assistant store managers $2,948 as opposed to Target's $2,457" (pg. 1) for example. In the evaluation of Target, that is a substantial difference of about $491, which Target should come up a way to compensate for that. One way could be to allocate that toward another financial element or use that money to pay more to the hourly workers. In doing so, Target would effectively become the better of the two when they are compared. Target team members also have access to discounts on other items such as mobile phone plans, computers, clothing, even tickets, fitness centers and more solely for being a part of the Target family ("Target," 2013). This is something that not all companies do, especially those in retail, therefore, Target is capitalizing on the element of non-monetary incentives by a company to be directed toward another. In other words, they are giving their employees an opportunity to save money on other products just by working at their company.

In sum, the Target Corporation has a relatively dynamic compensation plan. Certain components of it can be changed to better meet the needs of their employees. Continual evaluation will have to take place in order to keep up with the ever-changing needs of society and the different aspect of the industry that also change. Target Corporation, however, is one of the better retailers for an individual to work for given the amount of monetary and non-monetary benefits that they provide.


Dishman, L. (2011, May 2). Target vs. Walmart -- Which One Is a Better Place to Work? Retrieved August 19, 2013, from AOL website:

Doward, J. (2010, July 10). Happy people really do work harder. The Guardian|The Observer. Retrieved from

4 Tips for Business Paid Time Off Plans. (2010, November 13). Retrieved August 20, 2013, from PayScale, Inc. website:

How Does An Employer Determine Employee Compensation For Increased Retention? (2013). Retrieved August 19, 2013, from Innovative Employee Solutions website:

Lewis, J. (2013). Difference Between Compensation Strategy of Hourly & Salaried Employees in a Retail Industry. Retrieved August 21, 2013, from The Houston Chronicle website: retail-industry-38368.html

Sunshine, J. (2012, July 25). More Than One-Fourth Of Private-Sector Workers Make Less Than $10 Per Hour: Report. Retrieved August 19, 2013, from The Huffington Post website:

Target. (2013). Retrieved August 19, 2013, from Target Brands, Inc. website: