External Competitiveness Policy
Unit 5 Assignment: External Competitiveness
In this assignment, you will suggest an external competitiveness policy for an organization of your choice that will help the organization meet their business objectives. You may want to choose a past or current employer, or you may choose any other organization that interests you. You may choose the same or a different organization from the previous unit. Research the organization through the company website as well as related articles available in the library.
In external competitiveness, comparisons with other employers that hire people with the same skills are made. Using concepts related to external competitiveness, compose a 2–3-page paper that provides pay recommendations for a manager's position in the organization that you have chosen. Apply appropriate pay concepts to determine the pay for a managerial position. Be sure to address the following questions in your paper:
What policy regarding external competitiveness would you advise? List the options and the pros and cons of each policy option. Offer the rationale for your recommendation.
What forms of pay and in what percentages would you recommend? Again, offer your rationales.
Consider the theories and research presented in this chapter. Which ones did you use to support your recommendation?
To successfully complete the paper, the following are the minimum requirements:
Review the grading rubric before beginning this assignment.
Compose a 2–3-page paper in APA format: 12-point font, double-spaced, indented paragraphs, citations, reference list, etc.
External Competitiveness
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External Competitiveness
For any company to grow internationally, it is always necessary to assess the external environment to assess the industry's competitiveness and compare it against where it stands. External competitiveness can be defined as the financial perks that an organization pays its staff members compared to the other payers in the industry. Understanding external competitiveness can be crucial in how an organization's HR department can go about attracting and retaining new talent. The Amazon Corporation is a technology company that operates globally. As the organization expands, attracting and retaining highly skilled employees, including those in managerial positions, is crucial. One way to accomplish this is by implementing a competitive compensation policy that ensures the manager's compensation package aligns with other employers in the industry. This paper recommends an external competitiveness policy for the manager's position at Amazon Corporation.
Three external competitiveness policy options are available for the Amazon Corporation, including matching the market, leading the market, and lagging the market. Leading the market might be a good option, but the challenge might be the overall cost-effectiveness of the company's financial health. Lagging the market might not be the best, as that will automatically result in a high turnover of skilled and talented employees from the company to competitors. The match-the-market option is recommended since it ensures that the compensation for managers is competitive with the industry average. This approach enables the organization to attract and retain highly skilled employees, improve employee morale, and decrease turnover rates, which can be costly. While the lead the market policy can attract highly skilled employees, it can result in higher compensation costs for the organization. Lagging the market policy can cause high employee turnover rates, affecting productivity. The moment employees realize that other companies in the same industry are paying more than where they work, there might be a tendency to lose morale and even engage in a go-slow, which significantly affects the company's profitability in the long run.
Regarding forms of pay, the compensation package for managers should comprise both fixed and variable pay. Clemens (2021) notes that fixed pay should account for approximately 70% of the total compensation, including base salary, allowances, and benefits, while variable pay should account for about 30% of the total compensation, such as performance-related pay like bonuses and stock options. The rationale for having a substa...