Setting the Stage for Strategic Compensation and Bases for Pay
Describe the three main goals of compensation departments. The three main goals of a compensation department are internal consistency, market competitiveness, and recognition of individual contributions. Internal consistency defines the relative value of each job among all jobs within a company. This ordered set of jobs represents the job structure or hierarchy. Companies rely on a simple, principle for building internally consistent compensation systems. Compensation professionals use job analysis and job evaluation to achieve internal consistency.
Job analyses describe content or job duties, worker requirements, and sometimes the job context or working conditions. Based on job evaluation and the firm’s priorities, managers establish pay differentials for virtually all positions within the company (Martocchio, pg. 22, 2011). Market competitiveness plays a significant role in attracting and retaining the most qualified employees. Compensation professionals build market-competitive compensation systems based on the results of market surveys and compensation surveys.
A strategic analyses permit business professionals to see where they stand in the market based on external and internal factors (Martocchio, pg. 22, 2011). Recognizing individual contributions helps determine pay structures. Every employee is different and employees don’t do the same job alike. One may have more knowledge or more experience and because of such disparity that is why HR professionals assign pay grades or assign pay grades within pay structures for a job.
Companies understand this want to compensate the employee for what they contribute to the job. Pay grades are in ranges that allow for the minimum qualifications to the highest and also allows for incentives when dealing with a prospective employee and their qualifications (Martocchio, pg. 22, 2011). Describe the contextual influence that you believe will pose the greatest challenge and the contextual influence that will pose the least challenge to companies’ competitiveness and explain why.
Market influences are the contextual influence that may pose the greatest challenge to a companies’ competitiveness. In a competitive labor market, companies attempt to attract and retain the best individuals for employment partly by offering lucrative wage and benefits packages. Companies that operate in product markets where there is relative little competition from other companies tend to pay higher wages because these companies exhibit substantial profits.
Labor unions will pose the least challenge to companies’ competitiveness although a high percentage of civilian workers in both the public and private sectors represented by unions declined steadily to a 12. 4 percent representation since 1983 when the representation rate was 20. 1 percent. Union representation will continue to decline in the future and this decline may be attributed to the reduced influence of unions. Describe when subjective performance evaluations might be better (or more feasible) than objective ratings.
Managers rely on objective as well as subjective performance indicators to determine whether an employee will receive a merit increase and the amount of increase warranted. Subjective might be better when supervisors wants to periodically review their employees individual performance. By using subjective performance will help to evaluate how well each worker is accomplishing assigned duties relative to established standards and goals. Objective rating typically defies interpretation: Either an employee was late five times or she wasn’t, or he met his widgets-per-hour target or he didn’t.
For that reason, some employers use purely objective measures for employees who have repetitive or entry-level jobs performance is a function of doing (or not doing) some specific action, or in meeting per-product or per-service productivity total Describe under what conditions profit sharing plans are not likely to motivate employees. Profit sharing plans allow employees to earn financial reward when their company’s profit objective is met. For employees’ who have a lower salary profit sharing is not likely to motivate them, because the amount distributed to each employee may be weighted by the employee’s base salary.
The employees’ with higher base salaries receive a slightly higher amount of the shared pool of profits. Because the company profits vary from year to year, so do employees’ earnings. This will make difficult for employees’ to predict their earnings, which will affect their savings and buying behavior. Employees find that profit sharing plans are not likely to motivate them because they do not see a direct link between their efforts and corporate profits. Employees may be given a range of investment choices for their accounts, including stocks or mutual funds.
Since the company have to decide to match a certain percentage of such contributions. In addition, many 401(k) accounts have provisions that enable employees to borrow money under certain conditions. The other reason why profit sharing plans does not motivate employees is because this plan establish a vesting period and a limit access to the funds. The limit access is to establish strict rules for making payments from employees’ accounts, such as upon retirement, death, permanent disability, or termination of employment.
Less strict rules may allow for withdrawals under certain conditions, such as financial hardship or medical emergencies. Nevertheless, whatever rules a company may adopt for its profit-sharing plan, such rules are subject to IRS approval and must meet IRS guidelines. Based on your knowledge of pay-for-knowledge pay concepts, describe three jobs for which this basis for pay is inappropriate and explain why. The three jobs which this basis for pay is inappropriate are librarians, electricians, and dietitians.
Librarians bring order to and guide users through the vast array of information available. The size and character of the library determine whether Librarians perform all phases of the work or engage in a specialty. A librarian needs to find ways to structure or classify multiple pieces of information. Actively looking for ways to help people and help them to understand written sentences and paragraphs in work-related documents. Electricians tackle a range of projects from wiring new homes and offices, rewiring existing structures to helping providing installation services for new solar panels.