Setting the Stage for Strategic Compensation and Bases for Pay
Setting the Stage for Strategic Compensation and Bases for Pay
By: Cynthia L. Chamberlain
Bus 409 Compensation Management
Strayer University – Professor K. Araujo
Week of January 23, 2012
Describe 3 main goals of compensation departments.
When considering the main goals of compensation departments, the three goals that come to the immediate forefront are internal consistency, market competitiveness, and the recognition of individual contributions. The first goal, internally consistent compensation systems, is of major importance because it is at this stage that each job within a company is defined in terms of relative value. Pay structures are assigned to jobs based on the qualifications required to do the job, the job duties, and the job’s responsibilities. Using job analyses and job evaluations lead to internal consistency. According to Martocchio, job analyses will give descriptions of the duties or contents of the job, the requirements of the worker, and the working conditions or job context. (Martocchio, J., 2011) By contrast, job evaluations focus on the differences within a job set and assigns pay differentials to reflect those differences or results.
The second goal of compensation departments, market competitiveness, involves pay systems. Market competitiveness influences how a company can attract and retain the best qualified candidates and employees. If the company expects to derive high performances from its employees, then the employees must be motivated to perform at their optimum level. Competitive salaries and benefits is a good motivator. However, before a determination can be made on the salary range, market surveys must be conducted. By using a strategic analysis, companies are able to gauge where they rank in both internal and external factors. Compensation surveys give an overall view of what other equitable companies are paying.
The third and final goal is that of recognition of individual contributions. Companies enjoy
By: Cynthia L. Chamberlain
Bus 409 Compensation Management
Strayer University – Professor K. Araujo
Week of January 23, 2012
Describe 3 main goals of compensation departments.
When considering the main goals of compensation departments, the three goals that come to the immediate forefront are internal consistency, market competitiveness, and the recognition of individual contributions. The first goal, internally consistent compensation systems, is of major importance because it is at this stage that each job within a company is defined in terms of relative value. Pay structures are assigned to jobs based on the qualifications required to do the job, the job duties, and the job’s responsibilities. Using job analyses and job evaluations lead to internal consistency. According to Martocchio, job analyses will give descriptions of the duties or contents of the job, the requirements of the worker, and the working conditions or job context. (Martocchio, J., 2011) By contrast, job evaluations focus on the differences within a job set and assigns pay differentials to reflect those differences or results.
The second goal of compensation departments, market competitiveness, involves pay systems. Market competitiveness influences how a company can attract and retain the best qualified candidates and employees. If the company expects to derive high performances from its employees, then the employees must be motivated to perform at their optimum level. Competitive salaries and benefits is a good motivator. However, before a determination can be made on the salary range, market surveys must be conducted. By using a strategic analysis, companies are able to gauge where they rank in both internal and external factors. Compensation surveys give an overall view of what other equitable companies are paying.
The third and final goal is that of recognition of individual contributions. Companies enjoy
References: Dessler, G. (2008). Human Resource Management. 11th Edition. Prentice Hall. Upper Saddle River, NJ. Martocchio, J. (2011). Strategic Compensation: A Human Resource Management Approach. Prentice Hall. Upper Saddle River, NJ.