Analysis Of Compensation Equity Is Very Popular Right Now

The fact that CEOs do not stay with a company very long also factors into the supply and demand of the CEO position. With CEO positions being opened up all the time that means there is a high demand for such positions, but they must be filled with highly trained professionals with years of experience, something a lot of people do not have to the quality of work needed. So if there is a high demand and a low supply it would mean that the compensation for these high position employment opportunities must equally be high to entice people for the position.

All employees analyze their environment and strive to be recognized and rewarded for their hard work and dedication they put into the company, in a word they are seeking justice. Justice can be defined as a person receiving what they feel they are entitled to and if they do not receive what they deserve, the situation may boarder on injustice. Unfortunately in today’s society justice and appreciation are not given out to all those deserving (Pinder, 1998). Within the Equity theory there are three justice theories. The first of which is distributive justice, this touches on if the referent feels that the outputs are fair that are given to the employees. This comes into play

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).

The CEO’s compensation should be set on how well the firm performs and should be awarded based on the performance of the stocks in the long run. It is easier to measure performance by the growth rate in the profits that have been reported since intrinsic value cannot be fully

While gathering the research for this paper I came across numerous compensation strategies. As with anything in life, we find a lot of possibilities, however there were three main structures that jumped to the forefront.

The base salary of CEOs represents 20% of his or her total salary while the remaining amount is considered incentives that is directly related to the business financial performance. In other words, if the business is successful financially, then the CEO shares part of the success (Executive Compensation, n.d.).

The term compensation refers to all forms of financial returns and tangible benefits that employees receive in exchange for their time, talents, efforts, performance, and results (Bernardin & Russell, 2013) Presumably, employees are motivated by the compensation they receive in all combinations to include their benefits packages. Naturally, employees want to be able to take care of their family to include having good medical coverage and other related benefits. Equity is said to occur when a person perceives that the ratio of his outcomes to his inputs is equal to other’s outcome/input ratio (Salvendy, 1976). Of course, employees want more money, and companies want more work out of each employee. With the cost of benefits like health insurance continuing to rise, companies have to take the higher cost of benefits into consideration when implementing pay

See, Bob Reich isn't the just a single to notice disparity. Indeed, even most corporate chiefs are worried that soaring CEO compensations are askew with corporate benefit, and also normal worker wage. As working mom Nancy Rasmussen says, it just doesn't seem right. "I took a pay cut of $12 an hour. My benefits have gone down," Rasmussen says. Her voice cracking with emotion, she asks, "If you have millions of dollars, why do you need that little bit that I have?" We see it all around us: A CEO gets a huge bonus the same year he lays off hundreds of

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:

They believe that the unfairness in pay that is so prevalent in America will slowly but surely violate the public’s feeling of what is fair. William J. McDonough is not some liberal politician or university professor exposing his views to an adulating audience or a classroom of college students. He is the former vice chairman and special advisor to the chairman at Merrill Lynch & Co. Inc., and the former President of the Federal Reserve Bank of New York. “America’s business leaders, McDonough believes, have a moral responsibility to end compensation excess. If society appeals to this moral responsibility, he also believes, business leaders will see the light and take steps to limit the gaps that divide us.” (greedandgood.org 1) This type of moral standing can be used as a calling card that rallies people to gather in strength and cause political change, similar to the “too much Federal Government” call of the “Tea

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

It was reasonable for a CEO’s compensation to increase as the company expanded and became a larger entity, and the newly-granted shares and increasing stock options further aligned the CEO’s personal interests with those of the company and shareholders. In this sense, the second compensation package was also well-structured and not excessive. Seeing Sunbeam’s revenue rising and stock price climbing steeply upwards, Sunbeam’s shareholders and directors were fully convinced by Dunlap’s leadership, so they might perceive the increase in compensation amount necessary to retain and better motivate Dunlap to enhance the company’s value. Nonetheless, they neglected the fact that the increased portion of the equity-based compensation also further motivated the CEO’s dangerous behaviors pertaining to improper earnings management.

These pay systems provide the employee with automatic pay increases. These are absent of subjective performance reviews or objective data that is hard to obtain. To the contrary, seniority is easily indexed by the employee and company (Martoochhia, 2011). It is theorized that seniority pay also incentives employees to take greater interest in the success of the company. If the employee is to reach the upper levels of the pay table then the company must be around in those years or decades to come. This deters the employee from taking part in inappropriate or damaging behavior. Subsequently, providing more value and productivity (Moriones, 2001). Furthermore, seniority pay discounts any accusations of favoritism, as everybody is tied to the same pay system. This greatly enhances the ability of managers and supervisors to motivate their workforce (Martoochhia,

This report explores the issue of the pay that top executives make, and the reasons why they do. It also suggests improvements that can be made to make the system better. High Pay Seems Small When Compared To Company Profits Many companies pull in profits that are extremely high. When an employee of such a companies salary is compared to the amount of profit that the company earns, it starts to seem reasonable. It only makes sense that if the employee is directly responsible for the success of their company, then they deserve to get their payback. It seems ironic, but many salaries even look small once compared with a companies profits. Top Executives Are Under A Lot Of Pressure Being the CEO of a

Given the effect a CEO can have on a company's success, we can understand why their compensation packages