A Pay Model and Defining Internal Alignment
OBJECTIVE
EFFICIENCY * Performance * Quality * Customers * and Stockholder * Costs
FAIRNESS
COMPLIANCE
COMPLANCE
TECHNIQUE
EXHIBIT 1.5 The pay Model
ALIGNMENT Work Descriptions Evaluation Analysis Certificate Internal Structure
COMPETITIVENESS Market Surveys Policy Line PAY Definitions STRUCTURE PPSTRUCTURE
CONTRIBUTIONS Seniority Performance Merit Based Based Guideline INCENTIVE PROGRAMS
MANAGEMENT Costs Communication Change EVALUATION
A PAY MODEL
The pay model shown in Exhibit 1.5 serves as both a framework for examining current pay systems and a guide for most of this book. It contains three basic building blocks (1) the compensation objectives, (2) the policies that form the foundation of the compensation system and (3) the techniques that make up the compensation system.
Compensation Objective Pay system translate the strategy into practice in order to achieve certain objectives. The basic objectives, shown at the right side of the model, include efficiency, fairness, and compliance with laws and regulations. Efficiency can be stated more specifically: (1) improving performance, increasing quality, delighting customers and stockholders, and (2) controlling labor costs. Compensation objectives at Medtronic and AES are contrasted in Exhibit 1.6. Medtronic is a medical technology company that pioneered cardiac pacemakers. Its compensation objectives emphasize performance, business success, and salaries that are competitive with other
EFFICIENCY * Performance * Quality * Customers * and Stockholder * Costs
FAIRNESS
COMPLIANCE
COMPLANCE
TECHNIQUE
EXHIBIT 1.5 The pay Model
ALIGNMENT Work Descriptions Evaluation Analysis Certificate Internal Structure
COMPETITIVENESS Market Surveys Policy Line PAY Definitions STRUCTURE PPSTRUCTURE
CONTRIBUTIONS Seniority Performance Merit Based Based Guideline INCENTIVE PROGRAMS
MANAGEMENT Costs Communication Change EVALUATION
A PAY MODEL
The pay model shown in Exhibit 1.5 serves as both a framework for examining current pay systems and a guide for most of this book. It contains three basic building blocks (1) the compensation objectives, (2) the policies that form the foundation of the compensation system and (3) the techniques that make up the compensation system.
Compensation Objective Pay system translate the strategy into practice in order to achieve certain objectives. The basic objectives, shown at the right side of the model, include efficiency, fairness, and compliance with laws and regulations. Efficiency can be stated more specifically: (1) improving performance, increasing quality, delighting customers and stockholders, and (2) controlling labor costs. Compensation objectives at Medtronic and AES are contrasted in Exhibit 1.6. Medtronic is a medical technology company that pioneered cardiac pacemakers. Its compensation objectives emphasize performance, business success, and salaries that are competitive with other