Nobody downloaded yet

Setting the Stage for Strategic Compensation and Bases for Pay - Essay Example

Comments (0) Cite this document
Setting the stage for strategic compensation and bases for pay Table of Contents Introduction 3 Contextual influence posing greatest and least challenge for companies’ competitiveness 3 Subjective Performance versus Objective Ratings 5 Conditions in which profit sharing plans motivate employees 6 Pay-for-knowledge pay concepts 7 Conclusion 8 References 9 Introduction The main goal of compensation departments in organizations is to develop compensation practices which allow organizations to remain competitive in the labour markets and demonstrate it as an employer capable of attracting top talents from the industry and from the community in which it operates…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER98.1% of users find it useful
Setting the Stage for Strategic Compensation and Bases for Pay
Read TextPreview

Extract of sample "Setting the Stage for Strategic Compensation and Bases for Pay"

Download file to see previous pages However, it is important that compensation structures are aligned with the strategic objectives of the business. Three of the main goals of compensation departments in organizations are to attract talented personnel from the industry and help provide a certain amount of flexibility to the needs of the department; improve morale of employees and motivate them to ensure the existence of an innovative and knowledgeable workforce; as well as maintain salary standards which are competitive in the industry. Contextual influence posing greatest and least challenge for companies’ competitiveness Some of the external, as well as internal, conditions of a firm can determine the nature of pay structure which it would design or which would be appropriate for it. Most importantly, the supply and demand of labour in the market would be a serious consideration while designing its pay structure. Shortage of a particular skill in the market might imply that the organization might have to pay a higher price for those skills, and vice versa. In fact the demand and supply of labour in the market is the determinant of the existing wage rates at that region too (Prakashan, 2009, p.14). The other very important factor which would pose serious challenge before an organization is the prevailing market rates. This can be also termed as the comparable wages or the ongoing wage rates. The compensation policy fixed by an organization must necessarily confirm to the wage rates paid by other competitors in the industry. Otherwise, it might result in employees leaving the organization getting attracted towards those with higher salary packages. The cost of living also accounts for an important criterion based on which organizations develop their compensation structures and plans. It is crucial to make adjustments in pay depending on the increases or decreases in the cost of living index. When organizations fail to reset their salary structures according to the changes in the living index, it can face resistance from employees and unions demanding higher wages. This could be challenging for the organizations (Prakashan, 2009, p.14). Apart from the above serious threats there are certain issues which are also crucial for determining compensation structures but which pose challenges before organizations to a lesser extent. The ability of an organization to pay or its affordability is crucial to determine its pay structure. Degree of profits, costs of production, sales revenues are some aspects which must be evaluated before designing pay structures. Psychological and sociological factors greatly determine the extent to which an employee would be willing to put in effort in his job. A person’s psychological perception helps him equate his wage or salary levels as a measure of the extent of success he has earned. Lastly, rapid technological developments have been the main cause of rapid development of skills of employees. The level of wages of these employees has also been changing correspondingly. Thus, it is important that organizations keep track of changes in skill levels and wage level of ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Setting the Stage for Strategic Compensation and Bases for Pay Essay”, n.d.)
Retrieved from
(Setting the Stage for Strategic Compensation and Bases for Pay Essay)
“Setting the Stage for Strategic Compensation and Bases for Pay Essay”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Setting the Stage for Strategic Compensation and Bases for Pay

Compensation Programs: Seniority Pay Systems vs Performance Pay Systems

..., who also conduct training of employees. Thus, in most Japanese firms, rise in employee salaries bases on their job classification and years in service. In addition, the compensation comprises various levels with differences between them. This is because the increases based on merit or time period are minimal. Japanese firms also set pay levels at the same level as competition. They fix the levels with the information they get from comparing different series of tables, which relate the basic salary of employee to their age. Generally, the compensation system of Japan is very transparent and open. This therefore has led to the...
16 Pages(4000 words)Research Paper

Setting the stage for strategic compensation and bases for pay

...?Running Head: STRATEGIC COMPENSATION School: Topic: Strategic Compensation Lecturer: presented: Compensation DepartmentGoals Milkovich & Newman (2005) define compensation as the financial returns and benefits employees receive from employer in order to achieve a positive relationship between employer and employee. It is geared at enhancing employee’s performance and organizational effectiveness and consequently competitive advantage in the labor market. The compensation department is part human resource department as it is concerned with employee base pay and benefits administration. The...
4 Pages(1000 words)Term Paper

Setting the Stage for Strategic Compensation and Bases for Pay

... Sur 14 January Setting the Stage for Strategic Compensation and Bases for Pay Introduction: The departments of human resources in any organization involves strategies for their compensation and bases for pay to the employees since they prove to be significant for the betterment of the employees as well as their services to the organization. Strategic compensation refers to the deal that a company and its management plan in order to satisfy the employees and gain better services from them. Thus such planning and bases for the pay are decided depending on the requirements of the organization and include several factors such as the work environment, health benefits, retirement benefits, working styles and other relevant factors... in...
5 Pages(1250 words)Assignment

Pay and Reward Compensation Management

...? Reflection of Lecture 5 and 7 May 12 Lecture 5- Pay and Reward Compensation Management This paper will seek to express in brief what I understood from the lecture about pay and reward compensation management. I learnt several things about payment systems, the amounts paid methods and how pay is determined. I also learnt the reasons why pay systems vary. In the pay setting practice, I confirmed factors I already knew such as pay is based on hourly rates, and that the casual workers pay is not as predictable as the salaried ones. The internal market influence pay setting based on the local labor markets and the internal wage structures of the firm as well as internal equity. I learnt the importance of international comparison... . This was a...
3 Pages(750 words)Research Paper

Early Years Foundation Stage Setting

...?Early Years Foundation Stage (EYFS) Setting Early years foundation stage (EYFS) setting Introduction This paper summarizes facts about the processes that are involved in the implementation of Early Years Foundation Stage (EYFS) and assess the extent to which the early years curriculum it proposes has been implemented. According to Palaiologou (2010, p4) and the Department of Education (2012, p.1), under the EYFS setting, each and every child must be helped acquire the best possible start in life and this refers to every child early years development. EYFS suggests a standard policy and curriculum that, in the view of the Department of...
7 Pages(1750 words)Essay


...projects or even their own entrepreneurial developments (“Facebook beats google”, 2012). 2. The best fit and best practice approaches constitute different perspectives. The best fit approaches argues that compensation pay should be aligned with the organization’s strategy and values. The challenge these becomes finding the ‘best-fit’ between the strategic approach and compensation. These practices are contrasted with ‘best practice’ approach that argue there need not be a best fit between strategy and approach, but instead a universal approach to compensation in the organization. 3. A customer service-agent that manages issues that arise between...
2 Pages(500 words)Essay

Pay Structures, Pay & Merit

...realize that their success is counted on how the organization successfully attains its goals (Peter, 2002). Consequently, failure of the organization to achieve its goals will be their failure, and this will be a determining factor on their compensation package. This proposal will align individual employee interests with the company interest based on the understanding that any individual employee failure will be a contributing factor to the company failure or success. In addressing individual failure, I would make the employees aware that failure will not be tolerated. In assisting individual employees to boost their motivation, I would form formal working groups, set objectives for them...
2 Pages(500 words)Assignment


...banding practice is compensating workers based on their performance, secondly, employees would be able to receive salary increment after improving their skills and level of knowledge rather than waiting to the reclassified in another job group. The practice of broad banding encourages employees to develop their skills since they can move lateral within the organization while in the same band and they will still be able to receive salary increment. The key disadvantage of adopting the broad banding practice is that it reduces the level of competition within as organization because of lack of emphasis on status or title, which could have otherwise, been used by others as a motivating factor. 4.0...
3 Pages(750 words)Essay

Strategic Compensation

...Case study A. Issue from last Case Study One of the issues identified in the last case study is how much employees are paid. From the knowledge of Week 3 readings, I think employees should be paid for overtime based on person-focused pay. This is a plan that rewards employees according to skills, knowledge, and job-related competencies. The two criteria that should be used to pay overtime according to person-focused pay plan are skill-based pay and pay-for-knowledge. Incentive pay in the company should be defined as compensation, whereby the rewards vary according to a...
2 Pages(500 words)Assignment

Executive Pay Compensation

...considerably, the pay for other lower level workers has remained highly stagnant. According to the studies by some publications, it was discovered that the compensation given to company CEOs was way beyond 400 times that of the average workers, which raises the question of whether this is an ethical perspective that companies should consider in their management. Inasmuch as top level managers are significant in creating strategic management approaches, it is important to realise that the implementation of such ideas is the most essential; therefore, the people implementing them should be given due consideration just like the top managers. In this case, companies can have a highly...
9 Pages(2000 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Setting the Stage for Strategic Compensation and Bases for Pay for FREE!

Contact Us