Case Study: Salary Inequities at Acme Manufacturing

Compensation systems can take on many forms, all of which have positives and negatives related to it. However, certain components are noted to be determinants of solid compensation plans. One agreement of a solid compensation system is the use of incentives. “Clearly a successful companies set objectives that will provide incentives to increase profitability” (Needles & Powers, 2011). Incentive bonuses should be measures that the company finds important to long-term growth. According to Needles & Powers (2011) the most successful companies long term focused on profitability measures. For large for-profit firms, compensation programs should offer stock options. The interweaving between the market value of a company’s stock and company’s performance both motivate and increase compensation to employees As the market value of the stock goes up, the difference between the option price and the market price grows, which increases the amount of compensation” (Needles & Powers, 2011). Conclusively, a compensation plan should serve all stakeholders, be simple, group employees properly, reflect company culture and values, and be flexible (Davis & Hardy, 1999; The Basics of a Compensation Program).

First off, I have chosen to select a 48% distribution for the base pay section of the compensation package. As the CEO, I am taking into consideration the nature of the work, and the external forces that surround our company such as market pricing and and competition. In order to assure that our employees feel that as a company we are committed to our employees, and that they are financially secure, we are putting all of our base pay into the well-known system, Pay for Knowledge. This means that we are compensating our employees for the knowledge, value of skills, and competencies that our employees hold. As noted before, our production line workers have to acquire a high-level of skill and experiences, and also have multiple certificates from technical schools.

For the most part, a company’s compensation policy aims to ensure that employees are compensated in a fair and competitive manner. However, the compensation objectives employed by different companies can vary widely. This is especially true when taking into account wages vs. skills, competitor salaries, pay-for-performance, and other elements of compensation, like overtime, incentives, etc. (Snell, Morris, & Bohlander, 2015).

Per your request, we have assembled a report with a legal and statistical evaluation of the problems facing Acme. If you have any questions, feel free to contact us at any time.

Compensation is made up of two primary areas. Those areas are salary administration and benefits. In many companies, payroll is a role within the accounting department. In other companies, payroll is positioned in compensation. Currently, Motors and More consist of one female supervisor and four male managers. Although, Motors and More does not have an issue with providing equal pay, we will make sure the company pays every employee sufficiently. “The Equal Pay Act requires that men and women in the same workplace be given equal pay for equal work. The jobs need not be identical, but they must be substantially equal. Job content (not job titles) determines whether jobs are substantially equal. All forms of pay are covered by this law.” (Eeoc.gov, 2015)

Government has tackled the issue of pay equity for several decades, through a string of Acts. The issue arose as part of the discussion of civil rights in the 1960s but the conversation continues today. The concept of equal pay for equal work has philosophical roots in the doctrine of equality, where all Americans are considered to be equal under the law and entitled to equal rights. The issue of equal pay became a public policy topic as a means of enforcing this equality doctrine. This paper will discuss not only the doctrine, but the history of equal pay legislation from the Civil Rights Act to the Lilly Ledbetter Fair Pay Act of 2009.

With the constant change in today’s business world, to have a competitive advantage makes it difficult for employers to attract and retain the most talented employees. Identifying the company’s compensation strategy ensures the organization offers the right pay and manages the pay increases to retain top talents. When we hear the word compensation we think about compensating an employee for their work performed, but there

All base salaries will be set with in a range depending on experience, education, qualifications and position. These salaries will be set according to the market percentiles at similar organizations. All salaries will be reviewed for competitiveness on an annual basis and adjusted if the market and financial performance allows. Adjustments will be based off of performance reviews, experience, and overall contribution to the organization. Unless there is an exception from the CEO all salaries will remain on or below market target numbers. Incentive pay awards will be given to those who reach the pre-determined performance goals listed. All compensation plans will focus on improving performance and achieving strategic goals. Pre-determines

An issue could be whether to emphasize seniority or performance. Seniority-based pay can have an advantage over performance based to the extent that seniority is a goal for employees to stay at the business longer to achieve that pay. An obvious disadvantage of having seniority-based pay is that lazy employees could earn just as much as the hardworking employees. I would take actions such as formulating fair and consistent policies and practices, open door management policies, competitive pay and benefits, and employee trust and recognition. Fostering a good relationship between management and employees and addressing employee concerns make it less likely for employees to

In Peter Eavis’ article “Executive Pay: The Invasion of Supersalaries” the conflict of CEOs and top executives outrageous pay grade is discussed. Even though the “compensation machine” of Corporate America is running smoothly, there are multiple negative and dark undertones. In fact, many people believe that these shocking salaries are the roots of inequality within America. Currently, some CEOs are being compensated millions and millions of dollars as their normal annual salary. Even though the current executive compensation system focuses on performance and can “theoretically constrain pay,” there is nothing stopping the companies from giving their CEOs more. According to the Equilar 100 C.E.O Pay Study, “the median compensation of a

While these citizen protests and legislative actions could be an overreaction to a few isolated cases of executive compensation excess, the data suggests otherwise. According to the AFL-CIO (2013), executive pay has increased dramatically over the past several decades compared to worker compensation. In 1982, the pay ratio between executives and workers was 42:1, but by 2012 it had increased to 354:1. This 8.4-fold differential in compensation suggests that the productivity of executives has also increased 8.4-fold relative to productivity of workers. If executive pay is positively correlated with a firm's bottom line, then higher pay should predict success. Unfortunately, researchers have found the opposite to be true.

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

They are thinking of implement a strategic compensation plan as well as various other options that will allow its organization to focus on its strategic objectives and develop a comprehensive plan, considering base pay, short- and long-term incentives, benefits and growth opportunities. This kind of planning helps ensure that the compensation system will support the organization's long-and short-term objectives without overlap, which would have more than one pay plan driving the same objectives. The ultimate objective of this process is to ensure that the compensation system and other important facets attract and retain the desired employees and that it motivates them to do those things that support the business plan.

The grievance presented has significant relations with some provisions and regulations that have been pre-established in the union contract between the United Machine Workers Union, which represents our production personnel, and the management of Acme Manufacturing Company. However, this matter is specifically a case about opposing opinions and the legal perception of Mrs. Kyla Martin and her manufacturing supervisor Mr. Joe Jackson in regards to their authority and subordination. For our