Compensation and Benefit Systems - Research Paper Example

Compensation and Benefit Systems INTRODUCTION The compensation and benefits system in place a small organization as an employer of choice, thereby assisting the organization in attracting first-rate workers. Employs almost such a compensation that surpasses cash when thinking about whether your line of work provides them with security, constancy, and a sturdy future. A well-thought-out benefit and position system can help an organization appeal to and maintain employees. At the same time, such a benefit and compensation system does not have to be costly for the organization or surpass its budget (Martocchio 202). The following paper is a comprehensive research on the compensation and benefits system at Apple. COMPENSATION Close to 30,000 of Apple’s 43,000 employees in the United States operate in Apple stores. These positions make these employed members of the American service economy with a majority of them making around $25,000 annually. This annual income interprets to an hourly wage of $11.25 (McRitchie 2015). Apple argues that players of America service sector offer slight training to the employees and hope they part with the organization within several years. In comparison with other retailers, Apple’s compensation package for non-executive employees is over the minimum wage cap. The same package is also below that of The Gap, and slightly below Lululemon, which pays its sales staff about $12 hourly. The compensation system at Apple’s supplier assembly point Foxconn is notably different from that of employees in Apple stores and the C-suite level. Moreover, harsh working conditions that are underwent by Chinese employees who put together Apple products at Foxconn worsen the already deprived compensation system. A survey by FLA (Fair Labour Association) in early 2012 discovered that 64.3% of Apple employees at Foxconn were not content with their compensations because they did not cover their basic needs. Moreover, the same proportion of Apple workers experience difficult work conditions for about 56 hours weekly (Denning 2012). The same FLA investigation discovered that the average monthly salary for unsupervised Apple employees at Foxconn was around $385, which is equal to $4,622 per annum. This compensation system includes salaries from the high rate of overtime hours these employees engage in. These overtime periods often violate China’s legal optimal and Apple’s individual employment policies (Segal 2012). It is worth noting that the calculation of this analysis of the yearly salaries of Apple employees at Foxconn presumes that wages over the previous financial quarter represent those received all through the year. As a result, the strategy might exaggerate incomes for 2013 because they might have increased since and play down incomes for the financial year 2014 because incomes might increase (McRitchie 2015). The compensation system for Apple’s executive or leadership team demonstrates the significant income discrepancy between the Apple C-suite and staffers compensation systems. The table below offers a detailed illustration of the sum of $441 million required in compensation by the team of nine executives comprising Apple’s leadership team in 2011.   Salary  Stock awards Non-equity incentive plan compensation   Other   Total Timothy D. Cook $900,017 $376,180,000 $900,000 $16,520 $377,996,537 Peter Oppenheimer 700,014 700,000 16,129 1,416,143 Eduardo H. Cue 607,704 51,852,000 444,615 48,656 52,952,975 Scott Forstall 700,014 700,000 16,513 1,416,527 Ronald B. Johnson 700,014 700,000 16,129 1,416,143 Robert Mansfield* 700,014 700,000 16,129 1,416,143 Philip W. Schiller* 700,014 700,000 16,129 1,416,143 D. Bruce Sewell* 700,014 700,000 16,129 1,416,143 Jeffrey E. Williams* 700,014 700,000 16,129 1,416,143 Total $440,862,897 Table 1: A summary of Apple’s compensation of the leadership team (Denning 2012). Apple’s executive team comprises of the CEO and eight leading vice presidents. Key observations from this table include a total compensation sum equal to the total compensation sum for Apple’s 95,000 plant workers in China assembling Apple commodities. This compensation sum is $441 million. This figure comes about by dividing the $441 million by the average yearly income of an Apple worker at a Chinese assembly plant, which is $4,622. Another observation is that the sum approximated compensation of Apple’s leadership team in 2012 was equivalent to the sum approximated compensation of its 89,000 Chinese plant workers assembling Apple commodities (Shapiro 2012). Apple’s compensation system also entails stock awards given to the executive team. A great deal of the compensation given to Apple’s leaders is in the form of stock grants. These grants are periodic in nature and to some extent hard to value, thereby making their advantages debatable. In 2011, Apple chief executive Cook received $376 million following his succession of the late Steve Jobs. This amount comprises of 1 million restricted stock shares, which had a closing value of $376.18 in August 2011 conferred for over five years. The same year, senior vice president Cue received stock grants worth $52 million conferred for over four years (Shapiro 2012). Cue’s previous reception of a $14 million stock grant before becoming a senior vice president is an indication of the possible extension of significant stock grants to non-executive Apple employees. During the onset of Apple’s financial year 2012, regular stock grants were issued to the executive team. Apple regarded this issuance of stock grants standard in its compensation system. These particular grants were conferred over an estimated four years. Apple allotted 150,000 shares to 2/3 of the members of its executive team and 100,000 shares to senior vice president Cue. Collectively, stock grants for the fiscal year 2012 a sum of 1 million shares, which Apple valued at $397 million. The company’s conventional trend of delivering stock grants shows that there sum compensation of its leadership team might be substantially lower in 2015 than it was in 2014 (McRitchie 2015). Since the valuation of the compensation of Apple’s executive team is largely dependent on share values, underestimations are highly likely. However, stock grants still largely not considered a standard part of the yearly salary of Apple’s leadership team. BENEFITS Apple store employees are in the globe’s quickest growing sector, for an organization with the highest net worth, and led by one of America’s most paid chief executives, Tim Cook. Apple allows its employees to select benefits packages freely from the wide array they offer. With adaptable benefit packages, Apple employees can select health, life, and disability benefits packages that relate to their desires. Apple provides first-rate 401(k) savings and investment packages, pre-tax delays, investment preferences, online investment guidance, and share procurement plans (Shapiro 2012). Apple’s website indicates the significance of the education of the employees, which is why Apple also gives education classes to its staff members to assist them in realizing their target goals. Apple further offers substantial employee discounts, paid holidays, lengthy vacation plans, and health plus physique programs. An employee at Apple might be eligible to any or all of the listed benefits below although subject to his or her ranking and length of employment contract (Denning 2012). i. 401(k) package ii. A café that serves domestic and organic alternatives iii. Transportation programs iv. Worker stock procurement plan v. Fiscal education conferences vi. Adaptable expenditure accounts (for healthcare or reliant daycare requirements) vii. Health insurance viii. Holiday/vacation compensation ix. Life coverage x. Long-term care coverage xi. Long-term insurance for ill health xii. A fitness center at the workplace xiii. Individual/family therapy xiv. Commodity price cuts xv. Temporary disability coverage xvi. Tuition support xvii. Wellness packages CONCLUSION The immense compensation and benefits levels of Apple’s leadership team, in comparison to the insufficient levels of Apple Store employees and assembly workers in China, is a sign of the prodigious resources the organization can employ to close this income inequality gap. The employment of these resources is a significant implication of the significant income difference between the compensation and benefits systems of Apple’s leadership team and its subordinate staff (Martocchio 119). Apples first-rate commodities and peak payments to its leaders could be balanced by assuring sound work settings and compensation for Apple Store employees and assembly plants workers. Works Cited Denning, Steve. Apples Employees Have A Hell Of A Ride. Forbes. 2012. Web. 2015, Sept. 13. Martocchio, Joe. Strategic Compensation: A Human Resource Management Approach Author, 8th ed. Pearson Custom, 2014. McRitchie, James. Apple Inc. (APPL): Proxy Score 83. Corporate Governance. 2015. Web. 2015, Sept. 13. Segal, David. Apple’s Retail Army, Long on Loyalty but Short on Pay. New York Times. 2012. Web. 2015, Sept. 13. Shapiro, Isaac. Comparing the pay of Apple’s top executives to the pay of the workers making its products. Economic Policy Institute. 2012. Web. 2015, Sept. 13. Read More