Compensation and Benefit Systems: Mid-term Essay Exam

Name of Writer: Date of Submission: Introduction Throughout the twentieth century all the practices pertaining to human resource management was known as man power planning or personal management. In the early 20th century the main focus of human resource management was on employees in factories and their effective deployment in order to boost manufacturing output. After some time the government imposed extensive payroll taxes and fixed the minimum wage law. It became legal binding for all the manufacturers to integrate administrative function into personal management. It is a fact that companies that manage their human resources and employees have higher rate of success. In order to run the HR function effectively and smoothly the compensation function is introduced. Compensation is a vital component of human resource system. There are different types of compensations. My paper will discuss about strategic analysis, contextual factors, traditional basis for pay, motivational concepts, building internally consistent compensation system and aspects of designing a competitive compensation system. Strategic Analysis and Contextual Factors In order to run a successful company there is a need that compensation professionals must have a good knowledge about competitive situation of the company. This knowledge is very useful for compensation professionals because it helps them in properly implementing strategic compensation practices and guides them to develop such practices. According to compensation in action feature, there is a need to invest in human resource in order to achieve competitive advantages. (Martocchio, 16) The role of strategic analysis is very important in achieving such competitive advantages. Strategic analysis helps in the examination of company`s internal conditions as well as external market context. In order to completely understand strategic analysis compensation professionals must be aware of several different factors that could affect any company`s choice to make compensation tactics and competitive strategies. These factors include organizational culture, national culture and product life cycle. (Martocchio, 18-22) Traditional Basis for Pay and Motivational Concepts From the start of the industrial revolution businessman from around the world have been searching for the secret of improving productivity. This need urged the scientists to completely study the work environment and relationship of organizations with people. This research led to many different theories about organizational structure and physical environment. (Martocchio, 36) This enabled the researchers to find out why people work and what are the forces and factors whic...