Assignment 1 Compensation Management
Assignment 1
Arlene Miller
Professor Fitzpatrick
Compensation Management – BUS 409
October 30, 2011
Describe the three main goals of compensation departments. The compensation department’s main goals are: internal consistency, market competitiveness, and recognition of individual contribution. Internal consistency compensation defines the value of each job among all jobs in a company. This represents the hierarchy of the set of jobs. Companies use a simple but fundamental principle for building this system, it is the more an employee has whether more qualifications, responsibilities or more duties are and should be paid more than the employees that are less qualified, have less responsibilities and less job duties. Internal consistency compensation recognizes the differences in job characteristics and pay is based on that. Job analysis and job evaluation are used to define the value of jobs. Job analysis is a process used to gather, document and analyze information to describe the different jobs content, such as, duties, requirements, and sometimes working conditions. Job evaluation is used to recognize the differences in worth among the different jobs and to set pay accordingly. Job analysis is descriptive, job evaluations reflect the value and importance management places on a different positions.
Market competitive pay systems play an important part in attracting and keeping the most qualified employees. Based on market and compensation surveys, compensation professionals build a market competitive compensation system. Strategic analysis is used which is an examination of the external market context and internal factors of a company. External market context is the “industry profile, information about competitors, and long-term growth prospects” (pg 22). Internal factors consist of the “company’s financial condition, their functional capabilities” (pg 22). A strategic analysis lets professionals see where they stand against other professionals.
Arlene Miller
Professor Fitzpatrick
Compensation Management – BUS 409
October 30, 2011
Describe the three main goals of compensation departments. The compensation department’s main goals are: internal consistency, market competitiveness, and recognition of individual contribution. Internal consistency compensation defines the value of each job among all jobs in a company. This represents the hierarchy of the set of jobs. Companies use a simple but fundamental principle for building this system, it is the more an employee has whether more qualifications, responsibilities or more duties are and should be paid more than the employees that are less qualified, have less responsibilities and less job duties. Internal consistency compensation recognizes the differences in job characteristics and pay is based on that. Job analysis and job evaluation are used to define the value of jobs. Job analysis is a process used to gather, document and analyze information to describe the different jobs content, such as, duties, requirements, and sometimes working conditions. Job evaluation is used to recognize the differences in worth among the different jobs and to set pay accordingly. Job analysis is descriptive, job evaluations reflect the value and importance management places on a different positions.
Market competitive pay systems play an important part in attracting and keeping the most qualified employees. Based on market and compensation surveys, compensation professionals build a market competitive compensation system. Strategic analysis is used which is an examination of the external market context and internal factors of a company. External market context is the “industry profile, information about competitors, and long-term growth prospects” (pg 22). Internal factors consist of the “company’s financial condition, their functional capabilities” (pg 22). A strategic analysis lets professionals see where they stand against other professionals.
References: Martocchio, J. J. (2011). Strategic compensation: A human resource management approach: 2011 custom edition (6th ed.). Upper Saddle River, NJ: Prentice Hall.