A Pay Model and Defining Internal Alignment

9320 Words38 Pages
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…show more content…
Job design, training, and team building may be used to reach this objective. The pay system aligned with this employer 's objective may have a- policy of paying salaries that at least equal those of competitors (external competitiveness) and that go up with increased skills or knowledge (internal alignment). This pay system could be very different from our first example, where the focus is on increasing customer satisfaction. So, objectives guide the design of pay systems. They also serve as the standard for judging the success of the pay system. If the objective is to attract and retain the best and no brightest, yet skilled employees are leaving to take higher -paying. jobs with other employers, the system may not be performing effectively. Although there may be many non-pay reasons for turnover, objectives provide standards for evaluating the effectiveness of a pay system. Four Policies Every employer must address the policy decisions shown on the left side of the pay model: (1) Internal alignment, (2) external competitiveness, (3) employee contributions, and (4) management of the pay system. These policies are the foundation on which pay systems are built. They also serve as guidelines for managing pay in ways that accomplish the system’s objectives. Internal Alignment Internal alignment refers to comparisons among jobs or skill levels inside a single organization. Jobs and people’s skills are compared in terms of their relative contributions to
Open Document