Organization’s Compensation Strategy
Write an essay explaining your new compensation strategy for the mid-level manager position you still need to fill. Your audience is the chief executive officer (CEO) and other supervisors in your organization. In this essay, include the items listed below.
After a brief introduction, explain how equal employment opportunity laws impact the organization’s compensation strategy.
Compare and contrast the advantages and disadvantages of pay-for-performance and competency-based pay.
What strategy would you recommend for your organization, and why?
Explain how various motivational theories can factor into your development of a multi-generational compensation package for your whole organization that includes indirect benefits. Be sure to give specific examples of how different generations of applicants or employees will be affected.
Explain your proposed compensation package, which should include direct and indirect benefits and how the package will affect hiring and retention. Be sure to specifically identify how much you will pay the mid-level managers, and indicate how it compares to your state and the federal minimum wage. You can search the Internet for sites that list comparable pay data. You should identify a low, medium, and high pay range for the mid-level manager.
Explain how you will assess the effectiveness of the compensation strategy a year from now.
Your essay will contain a one-page appendix in which you will create a chart of your compensation strategy. This chart should have three columns, which should address the areas listed below:
legally mandated benefits, direct benefits (include how much you will pay the mid-level managers), and
indirect benefits.
Your essay will be a minimum of five pages in length, not counting the appendix, title page, or references page. You must use at least two sources to support your essay. Adhere to APA Style when constructing this assignment, and make certain to include in-text citations and references for all sources that are used. Please note that no abstract is needed.
Week 3
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Week 3
The employees are one of the most important people in the organization. The main reason is that their efforts will affect the organization's outcome. Since these employees offer services to the organization, the organization, on the other hand, is supposed to offer them remuneration for their services. However, over the years, there has been a discussion regarding the remuneration of these employees. For instance, some employees have complained that they have been offered a different remuneration despite offering the same services and qualifications. Equal employment opportunity laws have been set to correct this trend. For instance, since these laws offer equal accessibility to employees according to their merits, it also highlights that individuals with the same merit will be offered similar compensation. These laws are therefore helping to eliminate the discrimination in remuneration that has been happening in the working place according to characteristics such as race and gender, among others. The equal employment opportunity law will help attain equality in the compensation strategy the organization will employ.
One of the important decisions that the organization has to make is the compensation policy that it will be using. Even though there are many compensation strategies, the most applied ones are pay-for-performance and competency-based pay. The pay-for-performance method is giving financial rewards to the employees for meeting or exceeding the set performance standards. On the other hand, the competency-based pay model is set up to offer compensation to the employees according to their experience, knowledge, skill, or experience rather than their position or job title. Even though these two models have some similarities, they also have outstanding differences. Since each model has its benefits and weaknesses, it is critical to check both models to make the right decision for the right model for our organization.
In both pay-for-performance and competency-based pay models, they motivate employees to work harder or improve their skills. For example, in pay-for-performance, the employees are paid according to the impact that they have had on the company; they usually work hard so that they can attain more in the organization since whenever their performance increases, their compensation will increase (Petersen, 2019). The employees also work hard to improve their skills in boosting their performance. Similarly, competency-based pay has also played a critical role in motivating employees. For instance, in this model, the employees are offered remuneration according to the skill they are offering to the organization; the employees are usually motivated to perform better to attain outstanding results. This process will motivate the employees to seek more skills which could help them attract more finances.
Similarly, pay-for-performance and competence-based pay models help to boost an organization's productivity. For instance, in the pay-for-performance model, employee compensation is based on the contribution that they have taken to their work. For example, the more they have produced they will receive. Most employees, therefore, look for ways to boost their productivity where they can perform more tasks in less time to earn more. As the individuals' productivity increases, it simultaneously increases the productivity of the organization in general. On the other hand, competency-based pay also boosts the productivity of an organization. For example, competency-based pay usually pushes employees to perform out of their comfort zone. Most of the employees in this form of pay have been pushed beyond their comfort, where they are currently learning more job skills. The following skills have helped them improve their effectiveness and efficiency, where they can now perform the tasks within a shorter period, thereby boosting the company's overall productivity.
The other similarity between pay-for-performance and competence-based pay models is that they help to reduce employee turnover and retain top talents. In most instances, the top talents are likely to be approached by other employers. One feature that makes the top-performing employees leave the company for the competitors is the remuneration they will receive after leaving. One of the best ways to maintain exceptional employees is by offering them a competitive compensation package. Moreover, whenever the employees know that they will be rewarded proportionally for their efforts, they will likely stay in the organization. Pay-for-performance usually helps to retain the top-performing employees since they are receiving income that is proportional to the services that they are offering. On the other hand, competence-based pay also helps boost employee retention. Since the employees will have the power to control their pay according to the skills they have attained, they likely are influenced to remain in the company to improve their skills. These models will therefore reduce the organization's turnover, thereby saving the organization the cost they could have incurred to seek and employ new employees.
The other similarity between these two methods is that they can negatively affect teamwork. For instance, performance-based pay could cause some employees to feel like they are competing. In most instances, when one employee earns more than the others, it could cause others to envy them. This process could cause the other employees to look for ways to outrun the other employees. Rather than collaborati...