“Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction. Compensation is a tool used by management for a variety of purposes to further the existence of the company. Compensation may be adjusted according to the business needs, goals, and available resources.” The three careers I chose for this case study are Public Relations Specialist, High School Teacher, and Project Coordinator. The reason for me choosing these specific careers was that I’ve held each one at some point in time. In this case study we will examine why each job has different salary ranges and why.…
This report examines 3 different compensation systems that our company can develop and enforce within our company for our employees. Compensation is the most important and rewarding factor for employees, so a thorough and thoughtful approach should be taken as we think about changing the way in which this company rewards it's employees for the work they do for us each and every day.…
A compensation strategy is one of the many human resources (HR) tools that organizations use to manage their employees. For an organization to receive its money’s worth and motivate and retain their skilled employees, it needs to ensure that their compensation system is not an island by itself. Not only is it important for an organization to link compensation to its overall goals and strategies, it is important that its compensation system aligns with its HR strategy. Let’s face it, if an organization is not paying its skilled employees what they are worth or at least the industry average, the chances are they will find an organization that will pay them for their talents.…
Five key elements should be considered when preparing a compensation plan for an organization. They five key elements include the forms of compensation that will be or can be offered, workforce demographics, the business cycle, the compensation philosophy, and legal and regulatory compliance. The forms of compensation has two forms that can be offered direct and indirect compensation. Direct compensation is all tangible rewards of the working relationship, that is, the sum of base pay plus variable pay (Locke, Jones, & Graham, 2010). Pay received in the form of services and benefits is called indirect compensation (Locke, Jones, & Graham, 2010). The product the organization offers the marketplace is the workforce of any service organization. In the business cycle it is critical for top management and HR professionals to match the compensation practices with what the organization is trying to accomplish (Locke, Jones, & Graham, 2010). the compensation philosophy is considered because organization want to pay to wages like their competitor 's but this might not be possible, therefore three approaches for compensation can be taken into consideration which are market-based pay, competency-based pay, and team-based pay (Locke, Jones, & graham, 2010). When managing compensation systems organizations must follow federal, state, and local regulations and reporting requirements. Some of these important regulations are minimum wage standards and hours worked (Locke, Jones, & Graham, 2010).…
A company’s fundamental purpose and objective of compensation is to provide adequate and equitable rewards to employees at a level that matches theirs skills, abilities and contributions to the company (DeNisi, Angelo S., Griffin, Ricky W., 2008, p. 284. Para. 1). Compensation is the human resource management function that deals with every type of reward that individuals receive in return for performing work – including financial and nonfinancial rewards. Financial rewards include direct payments (e.g. salary) plus indirect payments in the form of employee benefits. Nonfinancial rewards include everything in a work environment that enhances a worker’s sense of self-respect and esteem by others (Cascio, 2006, p.418, Para. 1).…
The compensation structure should reflect the company business plan and goals by placing a priority on customer service, repeat business, new client referrals, and safety. What the company can afford to pay and implementing programs to reward performance that align employee compensation with the success of the company should be the basis of the compensation structure (Cascio, 2013, p. 419). The compensation structure should keep fixed labor costs low and place emphasis on benefits, incentives, and merit based-pay. The correlation between employee compensation and the…
Austin is consistently growing in businesses and can be very lucrative for Mr. Stonefield and his employees. He must have some benefits to retain his employees and help grow his business if he is competitive with pay and benefits. In Austin, it is found the average salary annually for drivers who are allowed to be tipped bring in approximately $37,170.00 annually. Drivers usually average $25,020.00 without tips. Your competitors also offer medical insurance, vacation pay, and a retirement plan within this territory. There is also salary increases for employees who stay longer with the company based on reviews from customer satisfaction surveys, and the time they have served with their respected companies. There is also training that we see and consider as benefits within these companies. There is generally 1 to 2 weeks of training and a review of the laws, safety, and the street layouts of the territories in which they will be driving. One thing you may want to consider is the age of your drivers as well. It is not necessary to be the age of 21 or obtain a high school diploma to provide driving services in this industry. However, if your drivers are under 21 and the customers prefer to have alcohol while you provide driving services for them. No one…
Throughout the course of this semester, compensation systems and methods have been evaluated to determine how the compensation processes are utilized to attract and retain employees. Compensation is not only a monetary benefit, but also includes indirect benefits such as insurance, paid time off, disability leave, etc. Both direct and indirect benefits make up a compensation package. Within this paper, similar positions from the private, public, and military sectors have been evaluated with like roles and responsibilities to compare the compensation packages. The following positions have been chosen: Chief Financial Officer for private sector; State Comptroller for the public sector; and Director of Army Budget Office for the military sector. Several factors of the compensation system have been included such as the job analysis, job description, comparable work salary survey, market pay line, pay range, a comparison of each position, an analysis of the differences in compensation, and a career suggestion for a young professional. All of these factors make up the compensation system providing data and analysis to define a compensation package for each position.…
Internal Consistency – Internal consistent compensation systems clearly define the relative value of each job among all jobs within a company. This ordered set of jobs represents the job structure or hierarchy. Companies rely on a simple, yet fundamental, principle for building internally consistent compensation systems: Employees in jobs that require greater qualifications, more responsibilities, and more complex job duties should be paid more than employees whose jobs requires lesser qualifications, fewer responsibilities, and less –complex job duties. Internally consistent job structures formally recognize differences in job characteristics, which therefore enable compensation managers to set pay accordingly.…
This paper will examine setting the stage for strategic compensation and bases for pay. There are three main goals of compensation departments: internal consistency, market competitiveness, and recognition of individual contributions. Internally consistent compensation systems define the relative value of each job among all jobs within a company. (Martocchio, pg. 22, 2011) With this system companies want employees to be paid more based on their qualifications and responsibilities. They believe someone with less experience should be paid differently. To determine such evaluation companies use job analysis in order to provide job descriptions. The job evaluation is to determine pay according to a particular position. Market-competitive pay systems attract and retain the most qualified employees. (Martocchio, pg. 22, 2011) By obtaining a strategic analysis and compensation surveys companies can determine who is most beneficial to the company based on the results. Strategic analysis examines long term growth and outlines the company’s profile to keep them in the market. Compensation surveys are collected and reviewed to determine different pay and which benefit packages are best needed. Compensation surveys are important because they enable compensation professionals to obtain realistic views of competitors’ pay practices. (Martocchio, pg. 22, 2011) Finally, recognizing individual contributions determines pay structures, pay grades, and pay ranges. The pay structures focuses on the difference in an employees’ contribution to company. With this structure it helps the company determine which employee has greater knowledge of the job their performing which leads to better pay. Companies with similar job groups use pay grades to determine compensation. Pay ranges start at the bottom and reach the maximum allowed depending on the job.…
Companies today should mirror their compensation and benefit programs with their long- term business strategy and organizational culture. According to Casio (2010), “Pay systems are designed to attract, retain, and motivate employees” (p.421). The most important objective is fairness or to achieve internal, external, and individual equity; and maintain a balance in relationships between direct and indirect forms of compensation, and between the pay rates of supervisory and nonsupervisory employees. Employers must perform job analysis, develop job descriptions, evaluate the value of job/position in the organization, develop pay structure and pay levels to create competitive employee compensation and benefits (Cascio, 2010).…
A great sales team and the right compensation plan to keep sales people motivated is critical to helping business grow and prosper (Daniel, 2008). InterClean will create a new compensation plan and the goal is to reward sales success while motivating increased sales performance and providing a competitive, yet affordable reward levels. Rewards bridge the gap between organizational objectives and individual expectations and aspirations. To be effective, the new reward system will provide (1) a sufficient level of rewards to fulfill basic needs, (2) equity with external labour market, (3) equity within the organization, and (4) treatment of each member of the organization in terms of his or her individual needs (Casio, 2005). The compensation plan will be tied to the company`s strategic mission which means that a combination of merit system (designed to tie pay increases to each employee`s level of performance) and incentive system (designed to provide additional rewards to top performers) will be used. The broad objective of the design of this compensation strategy (i.e., financial and non-financial compensation) is to integrate salary and benefits into a package that will encourage the achievement of the organization`s objective (Casio, 2005). The new rewards package will consist of two components:…
Employee compensation can be a very complex issue in any organization. This area combines basic human resource concerns as well as financial aspects of the organization. When dealing with compensation, an organization must balance the employee’s expectation and its own financial abilities. Employee compensation not only covers the salary but also includes other indirect benefits that may be part of a total compensation package. Compensation packages are set up to appeal to potential employees within a competitive business world. In other words, “compensation is the total of all rewards provided employees in return for their services. The overall…
In the early part of the 20th century, employee compensation was minimal to nonexistent. With a few exceptions most employees were only rewarded in respect of the hours they worked. Any other kind of compensation that had to do with old age, poor health or death was entirely left to the hands of the employee or his family. Vacations if allowed at all were without pay. In 1940 and 1950 we can notice an increase in the acceptance and usage of employee benefits as a form of reward in addition to direct wages. During the end of 20th century this growth resulted in new types of employee benefits being added and existing benefits being expanded. Furthermore employers now had to make more difficult decisions on the method in which these benefits…
“Compensation is payment in the form of hourly wages or annual salary combined with benefits such as insurance, vacation, stock options, etc. that can positively or negatively affect an employee's work performance”Robbins “ Compensation management is a method of determining the cost of effect pay structure designed to attract and preserve, provide an incentive to work hard and structures to ensure that pay levels are perceived as fair”…