A Pay Model and Defining Internal Alignment

Each employee will be paid based on their capabilities rather than on the characteristics of their job. This will provide an incentive for employees to develop their skills and move into other roles.

Correct :Pay compression is related to and affected by inflation. It is the narrowing of the ratios of pay between jobs or pay grades in a firm's pay structure.

carefully planned out and considered, the total closure or failure of the organization could be at hand in the near future. In our modern age, employers know that salary is not the only factor that should be considered and that salary alone will not lead to better or more highly profitable workers alone. This is why compensation planning is important and why pay should have some connection between performance and compensation. This is why the human resources department should consider many monetary and non-monetary factors when considering how to properly compensate and motivate employees (Dessler, 2013).

Susan's initial thought of compensation is to match what her competitors are doing. By matching the compensation systems of organizations, she will be operating in the same pool of applicants as her competitors.

Compensating the organizations sales staff through the use properly designed performance pay will lead to profitable sales for the organization. Once again linking compensation to performance will benefit the organization in its ability to pay. It is important to design the compensation of the sales staff in a manner that encompasses all of the organizations goals as communicating with production staff will be a key component of the High Involvement Strategy, and it is important for the organization to demonstrate a commitment to the sales team that the relationship is not just purely financial. Therefore direct compensation for them should consist of a minimum base salary upon which their commissions are added.

--Finally, some opine that employee pay should be tied in part to the compensation of the owner/chief operating or executive officer of the business, with the lowest paid employee being paid no less than a certain

The resulting data was then analyzed for each structure. A regression equation was provided and resulting annual salaries for each position based on allocation of evaluation points was calculated. A table providing minimum, first quartile, average, median, third quartile, and maximum pay for each position in the structure based on the data was also provided. Using this information and the pay policy level decisions on whether or not to lead or lag the market a preliminary pay level for each position was also reached. Whether or not to overlap pay grades came into consideration when deciding on the spread for each structure. Depending on overlap in compensable factors between structures a spread of 50% or 10% was chosen. For example, in the customer service structure the positions have little in common and thus a 10% spread in order to have no overlap was chosen while for the software engineering structure the positions included a lot of overlap in knowledge and skills thus the spread of 50% was chosen.

A well-articulated compensation philosophy drives organizational success by aligning pay and other rewards with business strategy. It provides the foundation for plan design and administration and anchors current and future plans to the company's culture and values (Kaplan, 2006, p.32). Recognizing and rewarding achievement is the cornerstone of the company A’s compensation philosophy. The mission of the company is to attract, select, place and promote all individuals based on their qualifications. The company believes that performance-based compensation helps attract, develop and retain talented professionals. In addition to base pay which based upon local market conditions and targeted to be above market, the company provides the following types of potential compensation to reward performance:

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 policy is defined as what an employer is willing to pay employees in comparison to what competitive employers are paying employees to do the same or similar jobs (Milkovich, Newman, and Gerhart, 2014). The three major pay policies are pay-with-competition policy, lead-pay-level policy, and lag pay-level policy. These policies compare the ability to attract, retain, contain labor costs, reduce pay dissatisfaction, and increase productivity (Milkovich, Newman, and Gerhart, 2014).

O’Neil (1998) suggests six minimal criteria for the design of a performance based pay system. The first of these criteria is that the reward system should be self-funding, that is, the performance increases should as a minimum offset the cost of the rewards provided. The second criterion is that the distribution of the rewards must be consistent, fair and justifiable. In addition reward plans must be transparent and clearly communicated. The third criterion

For a company to be competitive it will need to have systems in place to recruit hire and retain skilled employees to grow and carry out its mission and vision. The company will need to understand the market and how to interact within the different markets. For example, what should be the starting salary for new employees and how should current employees be evaluated. Market competitive pay system is significant in that a main focus is attracting and retaining the most qualified employees. Having a well designed pay system will ensure that employees are paid in proportion with their job description

In today’s competitive workforce, compensation and benefit packages plays a crucial role on recruitment and retention for both the organization and the employee. Bumpbie finds itself in a situation where it could positively affect its employee’s morale, turnover rate and longevity; by making a strategic decision to implement compensation and benefit packages that will encourage current workers to stay and entice new applicants. Money is not always the inherent reason businesses experience high turnover rate, the constant shifting in the job market will always be a contributing factor as well as employee’s moral. Mayhew, R. (2016), explains that an “employee compensation plan” refers to all the components offered as well as the way in which they are paid, and the reason behind the employees getting the compensation case bonuses, salary increases and incentives. The fact that there are voluntary and mandatory benefits that organization provides to their employees give employees the freedom of choice, as well as the option to make the whether to stay with or leave an organization based on the benefits it provides. Variable Pay is also an option that some employers offer their employee which is performance based or results oriented. Whether it is profit sharing, merit based programs or incentive bonuses; it all comes down to which organization can provide employees with the compensation or benefits packages that best satisfy their needs.

Pay for performance is to link employees’ salary or salary increase to his or her performance. It seems to be a reasonable or attractive idea but it often does not work well in organizations. Please use at least 4 motivation theories or models to explain why pay for performance may not work as expected—particularly in government and nonprofit organizations.

Today, competition between the businesses is extremely high thus companies need to find ways to be competitive. Organizations prepare the best market strategy to increase the company performance and the ways to keep their employee motivation on the highest level to perform well within the competition. At that time, several incentive pay programs play an important role for every organization to perform well within the competition.