... Identify advantages and disadvantages of internal and external equity for the organizations. Explain how each plan supports that organization’s total compensation objective and the relationship of the organization’s financial situation to its plan. Format your paper consistent with APA guidelines. Introduction All organizations value the compensation as a vital factor when trying to recruit and retain the appropriate staff. This will also help reduce turnovers within a company. The importances of external and internal equity are highly recommended. This paper will illustrate the total compensation plan for an organization focused on external equity and internal equity. This paper will also identify the advantages and disadvantages of internal and external equity for the organizations. By doing this I will explain how each plan supports the organizations total compensation objectives as well as the relationships of the organization’s financial situation to its plan. Internal and external equity Intel is an organization that practices using internal equity. Internal Equity method undertakes the job position in the organisational hierarchy (2007 Payroll.Naukrihub.com). This process aims to help balance the compensation provided to a job profile. This helps ensure that there is fairness between job rankings, job classifications, and level of management. Intel using this to ensure that their employees are being compensated fairly...
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...Internal and External Equity Compensation When a company is designing their total compensation plan there are many different factors that need to be taken into consideration. Are they going to go with a compensation plan that focuses on internal equity, external equity or maybe a little bit of both? What kind of benefits are they going to offer? Is the company going to pay for the benefits in full or will the employees be responsible for paying a portion of them? Then there are also the legal aspects that need to be followed to avoid legal ramifications such as the Lilly Ledbetter Fair Pay Act of 2009. Internal Equity Compensation “Internal equity deals with the perceived worth of a job relative to other jobs in the organization” ("Compensation Plans - An Overview - Base Pay", n.d.). “In developing a compensation package based on internal equity requires a corporation to develop and evaluate the compensable factors that will go into setting and individual employee’s pay” (Romanoff, n.d.). When a company chooses to base their compensation plan on internal equity what they do is they look at jobs that perform similar duties, and those jobs will be paid the same wage. For instance, if there are three Executive Assistants in a company then, all three Executive assistants pay will be around the same. Also with internal equity a company wants to retain the talent they currently have, so they are more than likely going to invest more in their employees by offering training...
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...Internal and External Equity Comparison Edgar Martinez HRM/324 September 10, 2012 Annette Clark Davis Internal and External Equity Comparison In today’s competitive globalized economy, an organization’s approach to equity and its perception of equity can affect an organization’s ability to captivate, retain, and motivate its employees. Therefore, external as well as internal equity play an important role in an organization’s design of its compensation structure. In this essay, it shall examine the total compensation plans for the Home Depot Corporation and IBM Global Services, focusing on internal as well as external equity. Additionally, it shall also review the various advantages as well as disadvantages of internal and external equity for both organizations. Finally, it will provide an explanation to how each plan supports each organization total compensation objectives as well as the relationship of the organization’s financial situation to its plan (University of Phoenix, 2009). Internal and external equity An Organization that notably uses internal equity to form its pay structure is the Home Depot. The Home Depot’s internal equity exist because of its pays wages and hiring processes designed to fit each store budget, instead of hiring people with the skills to do the job at a market rate pay. The Home Depot’s decentralized stores use an elitist compensation system with different compensation plans by organization level and incentives offered only to...
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...Internal and External Equity Comparison Total compensation means to reward employees for their labor. Compensation packages in today’s market can range from low to high depending on the company’s goal. Compensation packages have the ability to attract a certain type of candidate to apply for a specific position within an organization by the way they are designed. With the economy constantly changing and somewhat unstable, it is important for a company to offer a compensation package geared towards not only the employee but as well as the economic changes. Two types of equities plan an organization can use are, internal and external equity. Total Compensation Internal Equity Internal equity exists when employees in an organization perceive that they are being rewarded fairly according to the relative value of their jobs within an organization (hrcouncil.ca). Internal equity is a good way to ensure that employees receive fair wages and cannot file lawsuits against the employer. Although two employees functioning at the same level in the organization, it is possible for them to draw different pay. J.P. Morgan, an American Capitalist, is said to have a rule regarding investing into a company. Mr. Morgan stated that he would not invest in a company that pays the CEO over 50% more than the next level executives (Compensations Standards 2015). The corrective approach is addressing the "internal pay equity check" as did the companies like DuPont and Intel when they...
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...Internal and External Equity Comparison HRM 324 April 28, 2014 Internal and External Equity Comparison` When reviewing a successful companies' portfolio to determine what makes them more successful from the next, you will find the company will have a strong compensation plan. A Compensation Plan is one of the more important aspects in the organizational environment. Before formulating the compensation plan based on internal and external equity, it is important to first understand what internal and external equity refers to. External equity is said to be prevailing in the organization when the employees are rewarded with fair compensation to those who perform similar jobs in other organizations. External equity persists when an organization's pay rates are equal to the rates prevailing in the organization's market. (Lederer & Weinberg, 1995) Internal equity is present when the employees are being provided with fair wages relative to the value of their jobs within the organization. Responsibility, rewards and compensation provided to an employee should be in equity with the other person working at similar position within the organization. When formulating an effective compensation plan that is based on the internal equity, it is important to first consider the basic factors. The first step is to understand the types and varieties of jobs being performed by various employees within the organization and also the required level of skills, education...
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...Internal and External Equity Comparison HRM / 324 Recruitment, retention and reduction of staff turnover are some of the key things that many organizations focus on when they begin to put together the “fundamental glue” of the company, the Compensation Plan. Those things in mind, both the internal and external equity considerations, and how they effect an organization should not be dismissed. Compensation packages are arguably the most valuable piece of information to an organization as it begins to draw up a package geared at attracting and retaining suitable employees. A well-constructed compensation package has the ability to ensure that employees are not only attracted to the job in question, but are also willing to stay with the organization for an extended period of time after the job is secured. Proven to be highly beneficial to an organization especially by way of cost effectiveness is the ability to recruit effectively, higher the appropriate candidate, maintain a high retention rate for employees, and increase productivity. In this paper, internal and external equity is explored, including the advantages and disadvantages of both, an explanation of how the plans support an organizations total compensation objective and how they relate to the organization’s financial situation. Internal equity refers to the Employees' perception of their responsibilities, rewards, and work conditions as compared with those of other employees in similar positions...
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...Internal and External Equity Comparison Internal and External Equity Comparison Edgar Martinez HRM/324 September 10, 2012 Annette Clark Davis Internal and External Equity Comparison In today’s competitive globalized economy, an organization’s approach to equity and its perception of equity can affect an organization’s ability to captivate, retain, and motivate its employees. Therefore, external as well as internal equity play an important role in an organization’s design of its compensation structure. In this essay, it shall examine the total compensation plans for the Home Depot Corporation and IBM Global Services, focusing on internal as well as external equity. Additionally, it shall also review the various advantages as well as disadvantages of internal and external equity for both organizations. Finally, it will provide an explanation to how each plan supports each organization total compensation objectives as well as the relationship of the organization’s financial situation to its plan (University of Phoenix, 2009). Internal and external equity An Organization that notably uses internal equity to form its pay structure is the Home Depot. The Home Depot’s internal equity exist because of its pays wages and hiring processes designed to fit each store budget, instead of hiring people with the skills to do the job at a market rate pay. The Home Depot’s decentralized stores use an elitist compensation system with different compensation plans...
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...DISCUSSION ASSIGNMENT 1 5 MARKS WORTH 5% OF THE OVERALL GRADE FOR THE COURSE INTERNAL EQUITY (ALIGNMENT) AND EXTERNAL EQUITY (COMPETITIVENESS) After reviewing the Wilson Brothers Case Scenario, as Director of Human Resources for the organization, what conclusions can you draw with respect to the status of the company’s compensation strategies that are currently in place? What would you do to begin to address this situation? (3 Marks) Provide Constructive Feedback to at least two other student’s postings. (2 Marks) HINT:-reference both internal equity (alignment) and external equity (competitiveness) in your response. NOTE:-this Discussion Assignment will be marked on content, analysis, direct references to the readings, the overall professionalism of the presentation and constructive feedback to other students’ work. The organization’s strategies seem to be outdated, reflecting a different period in time. It does not seem that government policies, laws, and regulations are being followed and/or up to date. There are no consistent policies on employee relation issues and some employees’ fear of getting on the owners bad side would cause them to be terminated. There are also no policies on employment equity and pay equity. This could cause legal issues if they are not following the proper legislation set out by the government. There is also no pay structure and therefore, no differentials. Hiring salaries are negotiated which leads to no salary range for jobs within...
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...* Internal Equity—assure that jobs are objectively and consistently valued in relation to one another * External Equity—assure that the company is able to attract and retain the knowledge and skills needed to meet its objectives * Individual Equity—assure that individual employees are compensated in a manner that is fair in relation to the work they do and value they bring to the organization * Strategic impact—maximize productivity and effectiveness in achieving organization’s strategic goals There are three key components of developing job-based compensations plans: achieving internal equity, achieving external equity, and achieving individual equity. This illustration summarizes how these are interrelated and the steps involved in each component. The large majority of U.S. firms rely on this or a similar scheme to compensate their work force. One category of compensation tools is a job-based approach. This approach assumes that work gets done by people who are paid to perform well-defined jobs. Each job is designed to accomplish specific tasks and is normally performed by several people. Because all jobs are not equally important to the firm and the labor market puts a greater value on some jobs than on others, the compensation system’s primary objective is to allocate pay so that the most important jobs are paid the most. * Establish a job-based compensation scheme that is internally consistent and linked to the labor market. * Understand the...
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...| $ 47,274.7 | $ 51,198.6 | $ 55,448.0 | $ 197,573 | 7 year old | $ 31,731.2 | $ 34,364.9 | $ 37,217.2 | $ 40,306.2 | $ 143,620 | 9 year old | $ 27,053.9 | $ 29,299.4 | $ 31,731.2 | $ 34,364.9 | $ 122,449.5 | Total | | | | | $ 463,642.5 | Issue: Based on Table I, it would be difficult to save for the children’s education based on the taxpayer’ income. We do not attempt to maximize the value of our investments due to market risk for different investments. Therefore, the overall goal is to maximize tax savings. Our five two choices are: Custodian Accounts under the Uniform Gift to Minors Act and Section 529 plans. Conclusion: Section 529 plans is the best choice because it provide the best tax advantages. Reasoning: Section 529 Plans provide unsurpassed tax advantages. It is the best option because it is the only one, in which income from investments is not subject to income tax if used for...
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...ACC 200 Assignments 1. A sole proprietorship is a business owned by one person. A partnership is a business owned by two or more people . A corporation is a separate legal entity for which evidence of ownership is provided by shares of stock. Sole Proprietorship: Advantages: 1) Simple to establish 2) Owner controlled 3) Tax advantages Disadvantages: 1) Legally liable 2) financing difficult Partnership: Advantages: 1) easy to establish 2) shared Control 3) Tax Advantages Disadvantages: Liability Corporation: Advantages: 1) Easier to transfer owndership 2) Easier to raise funds 3) No personal liability Disadvantages: Tax 2. Internal users are managers who need accounting information to plan, organize, and run business operations. The primary external users are investors and creditors: -Investors use accounting information to help them decide whether to buy, hold, or sell shares of a company's stock. -Creditors use accounting information to assess the risk of granting credit of loaning money to a business. Other groups who have indirect interest in a business are taxing authorities, customers, labor unions, and regulatory agencies. 3. Financing activities involve collecting the necessary funds to support the business. Investing activities involve acquiring the resources necessary to run the business. Operating activities involve putting the resources of the business into...
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...the effects of your decision: considering the business demand, moving a machinery within a factory is not a strategic decision because doesn’t match the criteria said before, while moving a plant from a place to another, a really significant change, is strategic. Sometimes a no-decision can be a strategic decision: if you don’t decide for a long time you will find difficulties to change in the future, creating barriers. The effect of a decision is fundamental to define if it is strategic or not. Every decision, also the most trivial, have a goal behind, but most of them are not strategic. The strategic one has a fundamental and very important impact on your life and in your path. STRATEGY The strategy is an integrated, comprehensive plan which identifies the scope and the direction of the organization (decision maker). It is aimed at obtaining long term performance superior to competitors in relation to the goal and integrates a coherent set of strategic decisions. The concepts of objectives, strategy and strategic decision are all linked: firstly you have to understand our goal and then you can apply a strategy and thereby doing strategic decision. STRATEGIC ANALYSIS The strategic analysis can be of two types: external or...
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...Solutions to Chapter 15 Debt Policy 1. a. True. b. False. As leverage increases, the expected rate of return on equity rises by just enough to compensate for its higher risk. The stock price and stockholders’ wealth are unaffected. c. False. The sensitivity of equity returns to business risk, and therefore the cost of equity, increase with leverage even without a change in the risk of financial distress. d. True. 2. While the costs of both debt and equity increase, the weight applied to debt in the cost of capital formula also increases. Applying a higher weight to the lower-cost source of capital offsets the increase in the cost of debt and the cost of equity. 3. The interest tax shield is the reduction in corporate income taxes due to the fact that interest is treated as an expense that reduces taxable income. To the extent that the government collects less tax, there is a bigger pie of after-tax income available to the debt and equity holders. Example: Assume operating income is $100,000, the interest rate on debt is 10%, and the tax rate is 35%. Compare income for an unlevered firm versus a firm that borrows $400,000: | |Zero-debt firm |$400,000 of debt | |Operating income |$100,000 | $100,000 | |Interest on debt | 0 |...
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...for the first time. This case focuses on the organization’s attempts to control labor costs by decreasing expenses. Restructuring After a Hiring Freeze Objectives: The objectives of the strategic planning retreat were twofold. The first objective was to formulate plans to move the organization into new markets to increase revenue. The second objective was to find ways to reduce expenses. Compensation was a key component of those discussions, because labor costs are Thompson Technology’s largest expenditure. A number of ideas were generated to control costs, although no agreement was reached on exactly what should be done. As the discussions concluded, however, everyone agreed that compensation equity was a top priority and that it must reinforce the organization’s strategic advantage of product innovation and exemplary customer service. Montgomery was well aware that some employees believed their workloads had increased as a result of the reorganizations and staff reductions, so it came as no surprise to him when he returned from the retreat to find his desk piled with employee requests for compensation reviews. The strategic planning team will meet again later this week. Montgomery wants to be ready with a plan to refocus Thompson’s...
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...Running Head: WOOD-WORKS CARVINGS INVESTMENTS Wood-Works Carvings Investments Professor Daniel Terfassa PhD ACC557 May 19, 2013 Wood-Works Carvings Investments Describe the type of business you have created including: The product or service, and general staffing plan. Provide a rationale for your plan. Turning a lifelong hobby into a business is what has happened in the creation of Wood-Works Carvings. Wood -Works Carvings creates custom wood cabinets, furniture and carvings, that range in scale from miniature to full sized. In order to create such custom works it requires the company to lease out warehouse space for the milling process. Custom wood carvings have to be created by those that already haves the necessary skills and are familiar with how to operate the mill equipment. Wood-Work Carvings is a small company that will employ around forty people that will be employed in three broad departments, which range in areas of responsibilities from human resources, logistics management, and mill workers. Those that work in the human resources department will be critical in ensuring that the company brings in the right people with the right skill sets to move the company forward. This will act as the company’s filter when bringing people into the company, because there may be a great deal of qualified candidates but hiring the best of the best is what will make the company really stand out among the competition. The logistics management group will be...
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