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Pay Structures, Pay & Merit - Assignment Example

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Geographic location may result to a huge gap on executive pay structures. Those in hardship areas will be awarded more salary; in contrast those in normal working conditions will receive less remuneration regardless of the fact…
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Pay Structures, Pay & Merit
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Running Head: Pay Structures, Pay and Merit Pay Structures, Pay and Merit Pay Structures, Pay and Merit Introduction Pay structure is the assemblage of pay proportions or pay assortments. The process of developing, adjusting and maintaining a pay structure is referred to as structure setting (Peter, 2002).
Pay Structures
In justifying executives’ pay structures, this study points out that the following factors as the main considerations (Worldatwork, 2007):
Geographic location and job level of the executive. Geographic location may result to a huge gap on executive pay structures. Those in hardship areas will be awarded more salary; in contrast those in normal working conditions will receive less remuneration regardless of the fact that they perform a similar task.
Competitive positioning: Specific job function triggers a variation especially where the skills in need are rare. For an organization to retain such a skill, it might be forced to remunerate the person more handsomely than other executives in the same job level.
Regularity of amendment: Variation is commonly by job function and job level.
Executive compensation differs from sales or human resource personnel on the ground that executive compensation involves negotiation between the executive and the employer (Peter, 2002). Thus, it is negotiated and agreed on unlike other employees whose compensations are spelt out in advance. Executive offer letter is more detailed comprising a variety of options such as housing agreements, bonuses, incentives, guaranteed service pack in case of termination of employment, and income protection guarantees in the event of sale or other liquidity event resulting to change in the company administration. All these benefits and variety of options are not available to other employees.
Offering of more lucrative salary to executives is made in a bid to attract, motivate, and retain executive officers who have the capability of leading and managing business successfully, link an organization cash incentives with measurable performance align their interests with the company’s’ interests to achieve long-term goals. This has contradicting effects on low paid employees. In some instances, it motivates them to work hard and acquire the executives in order to receive such compensation in future. In other situations, low paid employees are demotivated, arguing that they are the ones who do most of the work, but executives ends up receiving more compensation than them (Worldatwork, 2007).
Pay and Merit
During survival mode, reduction of staff compensation strategy may be preventing layoffs, but an organization may end up losing its top talent. As a human resource manager, I would adopt a pay-for-performance strategy. In implementing this strategy, I would let them be aware that each of them will be compensated with the same amount of monetary value he or she will create for the company, with little basic salary as benchmark. For top management, I will make them 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 and allocate work equally. Individuals working in groups will achieve their objectives better than working alone (Peter, 2002). This way, the organization will be able to survive the hard economic conditions better than competitors because no person will be willing to lose his job with the view that possibility of securing another job during economic hardships is close to zero.
Eventually, through using this approach, I would be able to retain the highest quality employees because they are the most productive and this will be reflected in their pay. Low quality staff will feel the pitch of low pay resulting from the quality of their work and may leave work voluntarily. Armed with this understanding, implementation of the strategy will be easy, with little or no resistance.
References
WorldatWork. (2007). The WorldatWork handbook of compensation, benefits, & total rewards. Hoboken, NJ: John Wiley & Sons.
Chingos T. Peter. (2002). Paying for Performance: A guide to Compensation Management. John Wiley & Sons. Read More
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