A Look at Compensation Systems

In: Business and Management

Submitted By mararakibble
Words 2114
Pages 9
MARARA JEAN KIBBLE
AIU
PERSONNEL & ORGANIZATIONAL POLICY
WEEK #5
NOVEMBER 05, 2015.

ABSTRACT
This report will cover compensation systems, some advantages and disadvantages of compensation benefits, comparable worth, and some polices. The information will be used to further understand all topics discussed and addressed for management's purpose.

KEYWORDS: Compensation systems, advantages and disadvantages of compensation systems, benefits, comparable worth, compensation policies
INTRODUCTION
This report is to review Compensation and all related information to better understand the advantages and disadvantages of different compensation systems. Compensation and or the benefits worker's get are a reflection of the organization's value of the worker’s worth, and to the position or the duties required to accomplish the job duties. Compensation could and should provide motivation for the worker or applicant to perform to the best of their abilities, not simply clock in and clock out.

WHAT IS COMPENSATION The meaning of compensation is as followed, a fundamental component of employment and a critical issue for management and policies set in place. It traditionally refers to wages of employment, to include base pay or salary, bonus or incentives, benefits, and non-cash compensations. Organizations need to set and communicate clear principles by which workers are paid. In the least, they should ensure compensation policies adheres to employment standards and legislation. Some compensation elements governed by regulations are Minimum wage, holiday pay rates, overtime pay, payment methods and times, deductions, equal pay, and vacation pay. Also, many companies adopt compensation principles that ensure fairness and equity in pay rates and salary administration, and transparency in compensation practices.

COMPENSATION POLICIES: An effective…...

Similar Documents

Competency Based Compensation System

...Competency based Compensation system- As strategic HR Critical Review Komal Sarwar 4172 Human Resource Management Submitted to: Ms. Tehzeeb Amir Submitted on: 13th Oct’ 2012 Introduction and Overview of the article: The article that was provided was based on the compensation plans that an organization creates according to the capability and competency of its employees. It states the path that the organizations have taken to change how the traditional compensation plan were formed in the older days to the strategy they now apply to allot the compensations and incentives to the employees. Compensation management is one of the most important function of the organization, keeping in mind both the parties, as it gives a push of motivation to the employees towards their work and commitment towards the organization, making them work more effectively and efficiently. The draft gives an overview of what competencies are. Competency is actually the whole process on how things are done, rather than the outcome or result. It relates to the value that is added by each individual while performing any given task. It is further elaborated that there are three key categories of competency i.e. (a) organizational competency, that acts as a key factor in the success of an organization, making it competitive by figuring out the strengths and working more efficiently to enhance it; (b) job related competency, they vary from organization to organization, and from one task to......

Words: 862 - Pages: 4

Performance Appraisal Systems and Their Impact on Employee Compensation.

...Performance appraisal systems and their impact on employee compensation. Daniel Schroder MBA 533 Human Resources Saint Leo University Professor Michael J. McCabe J. D. In any organization, employee compensation and benefits are a sizable percentage of the cost associated with running a business. Although most employees would consider themselves under paid, most companies would consider their employees as being fairly or even over compensated. The determination of employee compensation and benefits is often based on factors such a seniority, dependability, and quality and quantity of the work performed. The decision of which employees will receive higher compensation, and how much the increase will be is often determined by many factors. The overall profitability of the business, the individual productivity of the employee or department, a across the board cost of living increase, and often the factors are nothing more than the suggestions of a manager or the owner of the business. In many small businesses these simple systems for compensation determination may be fine, and individual needs of the employee may be just as big a determining factor as any other reason related to performance. In larger businesses it is important to design, implement, and maintain a performance appraisal system, as well as a system that compensates its employees based on the outcomes of the appraisal system. A well designed employee appraisal system should include an evaluation by the...

Words: 1189 - Pages: 5

Compensation

...Employee Compensation that Encourages Performance By Kate Greene, SPHR The strategy my neighborhood kids use to get customers for their lemonade stand is not unlike what many employers use to get employees. The kids scream “35 cents a glass” over and over, louder and louder. Would they have more success if they used signs, knocked on doors, yelled in a more even tone of voice, sold from a rolling wagon, etc.? Similarly, employers that advertise $8.00 an hour, over and over, may not get applicants or results they require. Better results come from compensation strategies that align company and employee performance goals. Establishing wages that will both attract employees and provide contain labor costs starts with careful evaluation of internal and external factors to establish fair pay ranges that reward performance. Recently a client asked how to best compensate his employees. The response, it depends. Compensation is a complex issue requiring careful consideration and research regarding many factors. The design of your company compensation structure can send a very strong message regarding what you expect from employees. Many authors have written on this subject and a lot of research and compensation theories/plans have been completed. When working with a small to mid-size employer to create a compensation plan, I recommend following a few central principles. These are: 1. Keep it Simple Pay structures needs to be easy to communicate and understand. Complicated formulas......

Words: 953 - Pages: 4

Compensation System

...Structure--------------------------------------------------------------0914. COMPENSATION FOR TOP MID AND OPERATING LEVEL-----------------1015. Compensation---------------------------------------------------------------------------1516 Employee Benefit------------------------------------------------------------------------1617. COMPENSATION DIMENSION----------------------------------------------18 * Leave & Holiday pay------------------------------------------18 * Disability income continuation----------------------------19 * Health and accident protection----------------------------20 * Income equivalent payments--------------------------------21 * Payment for Time Worked----------------------------------2218. Non-Financial compensation------------------------------------------------------22 * Workplace Flexibility-----------------------------------------2319. Compensation Strategy:------------------------------------------------------------2520. Grade Structure ----------------------------------------------------------------------2621. JOB ANALYSIS--------------------------------------------------------3022. Job Specification-----------------------------------------------------------------------3223.CONCLUSION ---------------------------------------------------------------------- 34 | Letter of Transmittal 1ST December, 2010  To Md. Monzoor Morshed Independent University Bangladesh Baridhara, Dhaka-1212   Subject: Submission of report on......

Words: 3882 - Pages: 16

Building Internally Consistent Compensation Systems

...COMPENSATION AND BENEFITS AUTHOUR: Joseph J. Martocchio PUBLISHER: Pearson Education International DATE: 2011 ISBN-13: 978-0-13-254706-2 1. Table of Content (Building Internally Consistent Compensation Systems) Introduction 124 Determinants of Internal Consistency 125 Job Analysis 125 Steps in the Job Analysis Process 126-129 Job Analysis Techniques 131 O*NET 131-137 Job Evaluation 137 Compensable Factors 137-139 Job Evaluation Process 139-140 Job Evaluation Techniques 140 The Point Method 141-143 Alternative Job-Content Evaluation Approaches 144-145 Alternatives to Job Evaluation 145-146 Limitations to Internally Consistent Compensation Systems 146 2. Why I selected this Book: HRMN 330 Course Requirement 3. Theme (Key Quote): “Internally consistent job structures formally recognize differences in the job characteristics that enable compensation managers to set pay accordingly.” 4. Abstract: The purpose of this book is to provide knowledge of the art and science of compensation practice and its role in promoting companies’ competitive advantage. Compensating employees represents a critical human resource management practice: without such companies cannot attract, retain nor motivate best qualified employees. 5. Introduction Internally Consistent Compensation Systems define the relative value of each job when compared with all jobs within the......

Words: 2710 - Pages: 11

What Are the Strengths and Weaknesses of the Compensation System

...What are the strengths and weaknesses of the compensation system (they focus indirect compensation instead of higher salaries) Cirque du Soleil is providing the alternate to shrinking circus industry and called circus of the future. It was based on the blue ocean strategy and still after 25 years it is considered as blue ocean industry. It is based on the unique concept and creativity and maintains the quality and consistency over more than 2 decade. It performs five continent and more than 90 cities. Cirque du Soleil was founded in 1984 and grown from 73 employees in 1984 to now they have around 5000 employee. The biggest challenge for them is to maintain and attract these special tenanted employees or I should call them performer with competitively low wages. Cirque believes its unique approach to managing a worldwide workforce that runs the gamut from acrobats to administrative staff suits its business approach. Cirque adopted the unique approach to manage their workforce which is not totally based on higher salary. There compensation system is based on low salary but better benefits. They valued the noneconomic benefits like training in different places and different technique, good food which feels like home, shuttle services to work from home. Cirque motivates their employee towards their work where employees work with passion. Every employee feels like working in very specialized and unique place like Red Sox and Disney world and feels proud performing every night....

Words: 485 - Pages: 2

Microsoft Compensation and Benefit System

...Compensation and Benefits System of Microsoft MGMT 365 February 23, 2014 Compensation and Benefit System of Microsoft Microsoft was founded in 1975, and is the worldwide leader in software, services, and solutions (Career). Microsoft is proud to offer great products and employ outstanding people. Previous Microsoft CEO, Steve Ballmer once said, “There are many things that are true about Microsoft. We have big goals, big dreams, and big aspirations for the future. We are both competitive with our products and in the way we attract and retain talent. For me, the most important factor is competition for talent, because I know our success comes from the people who work here” (Foley). Listed at number 76 on Fortune Magazine’s 2012 “100 Best Companies to Work For”, the survey lists the average annual pay for salaried position as $132,023, and for hourly as $61,245 (Fortune). The most common salary job is Software Development Engineer, and the most common hourly job is Business Support (Fortune). There are currently 100,932 employees worldwide, with 59,197 of those employees being in the United States (Career). As with any company, Microsoft works hard to provide a compensation and benefit system that will attract and retain quality employees, while also choosing incentives and perks that will set them apart from competing firms such as Google, Apple, Oracle, and Facebook. According to Microsoft’s website, they are widely recognized as a leading company for......

Words: 1662 - Pages: 7

Compensation

...Executive Summary Now day’s compensation strategies are charged with supporting the company’s mission and objectives through the development and implementation of strategies, which ensure that valuable workers feel secured at their work place and rewarded for their accomplishment. A successful company focused compensation strategy including tuition reimbursement, bonus and paid time off. They are valuable programs and creating attraction process for most common compensation programs. These strategies are useful tool to improve employee satisfaction and work ethics. But, used incorrectly, it can cause some financial damages and relation disconnect between company and work forces. Bonus, tuition reimbursement and paid time off can be created to reward individual performance which is related to company’s mission and building trust in the organization. Company can use these strategy tools to communicate a fresh commitment from the employer to the employees and remind workers how much they are appreciated. The purpose this report is to determine the proper amount of compensations gets applied for different jobs in the organization. The organization because persuading the incorrect determination can cause bad implications for the company and damaging the work ethics of the employee organization as well as the employer’s power to hire qualified employees. Another purpose of the research report Well treated employees make a major role in a company’s power to improve its......

Words: 5183 - Pages: 21

Compensation

...Part 1 (Short Response) 1- How do differing perspective (society, managers and employee) affect the views of compensation? • Societal perspective: compensation is viewed as a measure of justice as well as a cause of increased taxes and price increases. • Managers: view compensation as a major expense and a means to influence employee behaviour. • Employees: view compensation as a return in an exchange with their employer, an entitlement, or a reward. 2- Explain the difference between base pay and performance pay. • Base pay: Base pay-wage or salary is the monetary compensation an employee receives for the work performed. For example, the base wage for machine operators may be $18 an hour but some individual operators might receive more because of their experience. • Incentives (or variable pay): Incentives tie pay increases directly to performance. It differs from merit increases. Incentives do not increase the base wage, and must be earned each pay period. The potential size of the incentive payment generally will be known beforehand. 3- What are the three tests used to determine whether a pay strategy is a source of competitive advantage? Are these tests difficult to pass? Can compensation be a source of competitive advantage? • Equity Theory: Fairness Equity theory focuses on how employees compare their work, qualifications, and pay to those of others. • Tournament Theory: Motivation and Performance Tournament theory suggests that the greater...

Words: 926 - Pages: 4

Compensation

...MGT6033: COMPENSATION & BENEFITS MANAGEMENT ------------------------------------------------- ------------------------------------------------- COURSEWORK / ASSIGNMENT I ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- Prepared By: Lim Chee Seong (IC: 661007-08-6109) ------------------------------------------------- (Student ID: PACE 024747) ------------------------------------------------- ------------------------------------------------- Lecturer: Dr. Perema Kumari S Ponnampalam ------------------------------------------------- ------------------------------------------------- a) Compensation management as one of the important link to the human resource management, has greatly affects the competency of an organisation or the corporate. Hence, the decision made by an organisation how to compensate its labours must be objectively and reasonably for the contribution from its labours in order to facilitate the corporate development and at the same time ensure the satisfaction of employee with monetary compensations......

Words: 2740 - Pages: 11

Compensation

...chose was my own. I chose to explore the Army and its compensation system. The Army falls into the innovator category and this assessment is based on the fact that the system is quite complex and it shifts to mass customization. The Army also focuses on cyclic time in how they pay all employees. Meaning bi-monthly or once a month and also has generic job descriptions. This is the closest structure I could relate the Army and the complex structure in which they compensate military personnel (Milkovich, 2014 p.43). Objectives: The objective of the military pay structure is to be equal to or meet the cost of living standards that are in line with the civilian compensation structures. There are no profit sharing or incentives for innovation within this structure. But the objective also is to reward through other compensation vehicles such as a 2.5 day leave accural each month and a benefits package unrivaled by many civilian corporations. That is where the objective of taking care of Soldiers and compensating them comes into play. Other objectives within the structure are a paid stipend for food and housing allowance in which your full rent is paid. The final objective is to ensure you are taken care of after you retire and you receive a percentage of your base pay for the rest of your life. Though the objectives are cyclic and timed based on years of service and certain other criteria this pay system truly looks out for its employees. Internal Alignment: ......

Words: 675 - Pages: 3

Compensation System in Industrial Enterprise

...United International University Course: Employee Appraisal and Compensation Course Code: HRM-634 Submitted to: Dr. Durgadas Bhattacharjee Submitted by: Tahreen Naheen ID: 112 141 001 Section: A Date of Submission:24.08.2015 Term Paper On Compensation System in an Industrial Enterprise in Bangladesh A Case Study of ‘Ha-Meem Group’ (Clothing Manufacturer) Introduction Compensation is the most important fuctions of human resource management. The present study aimed at exploring differences between the public and private sector industrial enterprises of Bangladesh with respect to overall status of compensation practices. Employee compensation is defined as the all forms of pay or rewards going to employees and arising from their employment. It is important both for employees and employers. Sound compensation can attract, motivate and retain competent employees of an organization. Compensation once determined should not remain same for years. It should be reviewed and changed after certain period through proper pay survey. Ha-Meem Group, a Bangladeshi clothing manufacturer, is leading supplier of readymade garments and denim fabric in the world. They are one of the top clothing companies in Bangladesh. The company produces some of the most fashionable denim fabrics and garment products and owns one of the most comprehensive...

Words: 1825 - Pages: 8

Compensation

...MGMT 6332 Compensation Final Exam 1. What are the behaviors that compensation ought to enforce? The first behavior compensation ought to enforce is that it must be attractive in order to recruit and hire high quality employees. Another behavior compensation ought to enforce is to make sure it is used in order to retain those high quality employees they recruited. It should also help to develop employee knowledge and skills and help to motivate the employees to perform to their highest ability while on the job (Milkovich, 2014, pg. 208-213). 2. Explain how personality characteristics can influence an employee's preference for rewards. Candidates are looking for jobs with reward systems that fit with their personalities. People that are more concerned with material things will be more concerned with the salary of a job, and people that have low self-esteem will most likely choose a larger organization that does not pay based on performance. On the other hand, those talented, outgoing, go-getter type personalities that like to take risks are more likely to choose an organization that pays for performance. Lastly, there are also people who are more individualists who would prefer to be in an organization where pay is based on individual performance rather than on group performance (Milkovich, 2014, pg. 317). 3. What are the four standards managers need to focus on when designing a pay-for performance system? There are four standards managers need to focus on wen......

Words: 1094 - Pages: 5

Designing Compensation Systems and Employee Benefits

...Designing Compensation Systems and Employee Benefits Compensation 1 Describe the differences between job analysis and job evaluation and how these practices help establish internally consistent job structures. A job analysis is a step-by-step specification of an employment position's requirements, functions, and procedures. Just as a seed cannot blossom into a flower unless the ground is properly prepared, many human resource management (HRM) practices cannot blossom into competitive advantage unless grounded on an adequate job analysis. A job evaluation is the process of analyzing and accessing the various jobs systematically to ascertain their relative worth in an organization. Job is evaluated on the basis of their content and is placed in the order of their importance. To achieve internal consistency, a firm's employees must believe that all jobs are paid what they are "worth." In other words, they must be confident that company pay rates reflect the overall importance of each person's job to the success of the organization. Because some jobs afford a greater opportunity than others to contribute, those holding such jobs should receive greater pay. For instance, most would agree that nurses should be paid more than orderlies because their work is more important; that is, it contributes more to patient care, which is a primary goal of hospitals. Compensation 2 For pay......

Words: 1214 - Pages: 5

Compensation System in Ucbl

...Compensation System (UCBL) Course Title Human Resource Management Course Code MGT (341) Prepared for                          Mr. Monzoor Morshed                    Adjunct Faculty      Department of Business Administration                University of Information Technology and Sciences                        Prepared By Md. Rayhan Razib Md. Shahriar Ahned Md. Golam Rasul Md. Rajib Hossain Md. Md najrul islam Date of submission: July 26, 2012 Letter of Transmittal July26, 2012 MD. Monzoor Morshed Adjunct Faculty Department Of Business Administration University of Information Technology and Sciences  Subject: Submission of term paper.  Dear Sir, With due respect it is my pleasure to present the term paper entitled Compensation System in (UCBL). While preparing the report I have tried my level best to focus closely on the topic and try to focus most complete and updated information available. I......

Words: 2065 - Pages: 9