Setting the Stage for Strategic Compensation and Bases for Pay - Research Paper Example

 Setting the Stage for Strategic Compensation and Bases for Pay This report will seek to describe five (5) objectives: 1) the three main goals of compensation departments; 2) the contextual influence that will pose the greatest challenge and the contextual influence that will pose the least challenge to companies’ competitiveness and why; 3) when subjective performance evaluations might be better (or more feasible) than objective ratings; 4) under what conditions profit-sharing plans are not likely to motivate employees; and 5) based on pay-for-knowledge pay concepts, three jobs for which basis for pay is inappropriate and then explain why. II. Three Main Goals of Compensation Departments
 The three main goals of compensation departments are: internal consistency; market competitiveness; and recognition of individual contributions.1 Compensation departments are, rightly, put in place in order to ensure that companies’ employees are being faithfully and appropriately compensated for work duties performed, and also are compensated adequately for excellent or more perfect job performances compared to a bunch of their employee peers. Compensation departments were put into place in order to provide employees with incentives to work harder, do a better job, and strive to do their best—three additional reasons that such a department is useful and needed in today’s modern office environment. Compensation departments can and should be used when it is found that, more often than not, other incentives are not doing the job of motivating workers. Most definitely, these types of departments do spur competition within the company, and a company should welcome this type of competitiveness indeed. It is when companies fail to have these kinds of contests that people check out mentally and feel that their work is no longer valid. Employees should be made to feel like their contributions do make a difference, even if they cannot compete on the same levels as some of the other employees. III. Contextual Influences Posing the Greatest and Least Challenge to Companies’ Competitiveness and Why The contextual influences which are posing the greatest challenges to companies’ competitiveness do not—amazingly enough—stem from the federal government, labor unions, or market influences—but the greatest challenge to companies’ competitiveness includes: having conflicts between employees and employers; having employees focus on fair and equitable pay; and having companies strive to maximize organizational objectives and maximize profits. Without a doubt, the biggest challenges to companies’ competitiveness deals a great deal with the attitudes of the people within the company. Attitudes are basically everything within a company. Once people stop being team players, the company can lose staff, which is manpower and working hours which are lost. Essentially, a good company has at its head (hopefully) a knowledgeable leader who understands the contextual influences which pose both the greatest and the least challenges to companies’ competitiveness. Unhappy employees definitely pose the greatest challenge to companies’ successes—not other outside influence or any other kinds of contextual situations. It only makes sense that the contextual influences that pose the greatest challenges to the company have to do with people and their attitudes. Thus, it is important—within the structure of any company—to maintain a positive morale and a positive outlook. This is because nothing can sink a company like negative attitudes and employees who are not satisfied with their compensation. Some contextual influences are more problematic than others, but it is hoped that good companies will succeed. IV. When Subjective Performance Evaluations Are Better (Or More Feasible) Than Objective Ratings Subjective evaluations are considered highly-valued by employees because they are more qualitative, and they factor in the ‘human element.’ “In some environments, subjective performance evaluation by a worker's supervisor allows for a more nuanced and balanced appraisal of the worker's effort. Such evaluation — based on judgment and more qualitative and flexible than explicit performance incentives—can be used to determine workers’ bonuses, raises, and promotions.”2 It only makes sense that subjective performance evaluations are going to be preferred by employees because an evaluation can be made on a case-by-case basis. Also, subjective performance evaluations are usually more personalized and they say something unique about the individual. Objective evaluations are more cold, calculating, and not as people-friendly as subjective evaluations. Many times, management may eschew subjective evaluations, claiming they take more time to put together and so forth. However, much of this pushback against subjective evaluations may be due to the fact that management may just want some simple way in order to evaluate their employees without having to expend much energy. What would make more sense is if these managers took the time to evaluate everyone on a sincere, more level playing-field, less employees would be in danger of being given a pink slip. V. Under What Conditions Profit-Sharing Plans Aren’t Likely to Motivate Employees
 Profit-sharing plans are not likely to motivate employees for several reasons. One reason might be that such plans may not entice an employee who doesn’t think the stock is worth much money. The low price of a stock may not mean much to an employee, even if he or she owns a lot of stock. If the stock loses money, then they (the employees) will have to bear the brunt of the fact that the stock lost money. Another possible reason why profit-sharing plans aren’t likely to motivate employees is because certain employees just don’t play the stock market at all, much less understand it. Many employees would rather just have cold hard cash—in the form of a paycheck—instead of owning stocks, which would have to be liquidated in order for them to see a profit. Liquidating stocks is not that sexy of an option, either, especially if the stock is not worth much. So, as one can see, there are a variety of reasons for people not to be very excite about this option. There is yet another reason why employees might not care to receive profit-sharing plans for motivation’s sake—they simply might not be able to afford any kind of compensation that does not directly affect their bank account and put money in their pocketbook. Especially in this economy, when times are difficult, incentives at work such as profit-sharing are going the way of the dodo or the dinosaur. It only makes sense to give employees something they will understand—cash—in the way of incentives, as one better method. VI. Describe Three Jobs For Which Pay-For-Knowledge Is Inappropriate and Explain Why Pay-for-knowledge would probably be inappropriate for people like ditch-diggers, sewer workers, and factory workers. Of course, all of these jobs require the same things to be done—hard labor—versus necessarily having to have a special knowledge of a problem—such as a lawyer, for example. Some lawyers are kept on retainer for $2,000 dollars per hour and so forth, because time is money in these peoples’ estimation. Therefore, they feel that they are to be compensated adequately or else it is not worth them taking the time out of their busy schedule to basically help whoever needs legal advice. Of course, there are also laws on the books governing who should get paid what. There are several wage laws in place, some states declaring that the federal minimum wage is not enough. “Examples of state laws that often exceed federal law include higher minimum wages in some states, [while other laws] includ[e] the National Labor Relations Act, the Fair Labor Standards Act, and state workers' compensation statutes.”3 VII. Conclusion Five objectives were achieved in completion of this report, including: the description of three mail goals of compensation departments; contextual influences posing the least and greatest challenge to companies’ competitiveness and why; when subjective performance evaluations are better (or more feasible) than objective ratings; under what conditions profit-sharing plans aren’t likely to motivate employees; and the description of three jobs for which pay-for-knowledge is inappropriate and why. WORKS CITED Fay, Charles H., et al. The Executive Handbook on Compensation. US: Simon and Schuster, 2001. Pp. 771. Forsythe, Dall W. Quicker Better Cheaper? US: Rockefeller Institute Press, 2001. Pp. 91. Martocchio, Joseph. Strategic Compensation: A Human Resource Management Approach, 6th Ed. US: Prentice Hall, 2010. Pp. 22. Walsh, David J. Employment Law for Human Resource Practice. US: Cengage Learning, 2009. Pp. 11. Read More