...Foundations of a Compensation Strategy Dana Williams BUS434: Compensation & Benefits Management Instructor Gwendolyn McCants-Allen July 7, 2014 An effective compensation strategy is made up of many different components and will directly support the organizations business strategy. As stated by Steve Elliott, the compensations strategy is “externally competitive, legally compliant, compatible with the culture and appropriate for the workforce” and above all it is perceived as fair (Miller, 2014, p. 1). When a company is creating a compensation strategy there are four components that should be reviewed in order for the company to be competitive in the global economy. The four components are; as stated by Henderson, (2006), “1) the work that must be performed by some work unit or individual, 2) the kinds and levels of knowledge and skill required, 3) the quality of people needed to promote organizational success, and 4) the rewards the organization can offer to its members that promote a work culture that ensures accomplishment of organizational strategy” (p. 5). In order for the compensation strategy to be effective, the process needs to create a clear link between the job description, performance evaluation, internal salary comparison and the external salary survey. A good starting point in creating a compensation strategy is to create a job description for each position within the company. A job description can be defined as a written statement that...
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...Before you think about designing and implementing a compensation plan, you must first develop a clear and compelling compensation strategy. To develop a successful compensation strategy you need to take the following steps: Define your compensation philosophy. Link compensation to your overall business strategy. Change the culture and reinforce it with compensation. Reward the behaviours that drive the results. Think total compensation. Measure your return on invested payroll £s. 1. Define your compensation philosophy A sound compensation programme begins with a clear, focused compensation philosophy that defines and answers fundamental questions such as: What do we want to pay for? How do we want to pay for it? What is our competitive posture? How will we split up the pie? We recommend developing a total compensation mission statement that clearly specifies the results you want to accomplish, the behaviours necessary to achieve them, what you will pay people for, and how you intend to position your company in the marketplace. This lays the foundation for your entire compensation programme. It serves as a compass and a beacon to guide you through the difficult task of creating and implementing the programme. Who creates the total compensation mission statement? Depending on the size of the company and the management structure, any or all of the following: board of directors, board of advisors, CEO, top management team and representatives from others in the organisation...
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...Before you think about designing and implementing a compensation plan, you must first develop a clear and compelling compensation strategy. To develop a successful compensation strategy you need to take the following steps: 1.Define your compensation philosophy. 2.Link compensation to your overall business strategy. 3.Change the culture and reinforce it with compensation. 4.Reward the behaviours that drive the results. 5.Think total compensation. 6.Measure your return on invested payroll £s. 1. Define your compensation philosophy A sound compensation programme begins with a clear, focused compensation philosophy that defines and answers fundamental questions such as: •What do we want to pay for? •How do we want to pay for it? •What is our competitive posture? •How will we split up the pie? We recommend developing a total compensation mission statement that clearly specifies the results you want to accomplish, the behaviours necessary to achieve them, what you will pay people for, and how you intend to position your company in the marketplace. This lays the foundation for your entire compensation programme. It serves as a compass and a beacon to guide you through the difficult task of creating and implementing the programme. Who creates the total compensation mission statement? Depending on the size of the company and the management structure, any or all of the following: board of directors, board of advisors, CEO, top management team and representatives from...
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...Marshall Givley Compensation & Benefits 1/24/16 Assignment 1 Assignment 1 1. I am using Lost Spur Golf Course as my example for mapping compensation strategies. One key point of my company’s strategy is external competiveness. Lost Spur will offer unique deals compared to the other golf courses in the area. Some forms of compensation I received while working is unlimited golf, free golf, and 40% discounts towards the pro shop apparel and food. Another compensation strategy Lost Spur used was internal alignment. Aside from the managers and employees who have been working there for an extended period of time, most employees were paid the same. However, the company did support career growth. If you excelled at your job, there were opportunities for promotions and increased pay. In a sense, they used “working hard” as an incentive for career growth. 2. As I stated in question one, most employees at the golf course were paid the same. This is similar to SAS’s philosophy where “Everyone is part of the SAS family.” So, one key difference between Lost Spur and Microsoft is the internal alignment. The differences in Microsoft’s pay are seen as returns for superior performance whereas Lost Spur does not have a lot of pay differences between its employees. Another key difference between SAS, Microsoft, and Lost Spur is career growth. Lost Spur offers a high amount of career growth although Microsoft and SAS are relatively neutral according to the strategy map. 3. There...
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...Assignment Compensation embodies both the intrinsic and extrinsic rewards employees obtain for accomplishing their jobs. Collectively, both intrinsic and extrinsic compensation refer to a company’s total compensation system. Innate compensation replicates employees’ psychological mind-sets that stem from accomplishing their duties. Extrinsic compensation consists of both financial and nonfinancial benefits. Organizational development professionals promote intrinsic compensation through effective job design. (Martocchio 4) Compensation is based on the following: • market study regarding the value of comparable jobs in the marketplace, • employee contributions and achievements, • the accessibility of employees using comparable skills in the marketplace, • the need of the employer to appeal and retain a certain employee for the value they are recognized to add to the employment relationship, and • the profitability of the company or the funds available in a non-profit or public sector setting, and thus, the ability of an employer to pay market-rate compensation. “Compensation moreover comprises payments such as bonuses, profit sharing, overtime pay, recognition rewards and checks, and sales commission. Compensation can also consist of non-monetary perks such as a company-paid car, stock options in certain instances, company-paid housing, and other non-monetary, but taxable, income items.” (Heathfield) Overview of Compensation Philosophy A compensation philosophy is...
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...Developing a Comprehensive Compensation Program A compensation strategy defines how an organization views and manages employee pay and benefits. The strategy serves as a guide and should be defined in a written document that clearly articulates the organization’s approach to compensation management. An effective compensation strategy serves to motivate current employees and attract new ones. Some people think of compensation as merely salary but the real cost of total compensation includes every aspect of employee benefits. The cost of health benefits, retirement benefits, tuition reimbursement, bonuses or other incentives are real costs that need to be considered part of total compensation. The first step would be to set a budget allocation. The strategy should include the organization’s approach to allocating compensation dollars into salary and benefits. How much of total compensation budget will be spent on salary and what percentage will be spent on benefits and other incentives. The second step would be to develop salary ranges. Developing salary ranges is critical to ensuring employee pay is competitive with other organizations. To be competitive, it is important to benchmark like jobs within the same industry and create a pay structure. Salary ranges can be developed internally by conducting research or utilizing sites like salary.com or payscale.com to determine average salaries in a particular geographic area. It is important to look at all jobs and determine...
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...Problem Solution: Foundation Schools The Foundation School is the leading special education school positioned in three different communities in the state of California. The board of directors is attracted to the idea of expanding the school system throughout many communities in the United States. To accomplish this they must first devise a strategic plan to increase their revenues and funding, and second increase their student enrollment 5% each year. Their strategic objectives are to ensure they identify any potential problems that can hinder their success as well as recognize any areas of opportunity for their organization. They are currently analyzing ways to increase the student to teacher ratio by implementing a new computer software program to aid in the students learning. The board of directors is interested in benchmarking other companies to increase their knowledge and improve their chance to meet their strategic objectives. Describe the Situation Issue and Opportunity Identification There does not appear to be a framework for project management or operations with the Foundation Schools project team. Confusion and identification with the project is compounded due to the lack of a project manager. The end state vision is not clear and can be very broad and does not lead to a conclusive success of the project. The teachers of Foundation Schools do not feel compelled to change their teaching styles to incorporate the Life Skills software. Stakeholder...
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...HRM430: Compensation & Benefits Chassity K. Moody DeVry University Online In a job market like the current one, attracting and retaining the best help is challenging. The key to finding and keeping good employees is creating an environment in which they would want to work. We have all heard about surveys that demonstrate that it is far more than mere compensation that motivates employees to stay where they are. It is the same when potential candidates are assessing their options and choosing which opportunity they will accept. The current competitive conditions in the business world make it difficult to acquire and retain the top talents. Once the organization is able to identify, it can be unable to offer the right pay and to manage the pay increases to retain top talents. The compensation strategy is the extremely important piece of the overall HR Strategy to keep the company competitive and successful. On the other hand, the compensation strategy is important to keep the personnel budget under the control and to manage the jobs in the right salary (pay) brackets. (Ulich, D, 2011) The focus on compensation is most often the most important source of the job. It is taken for granted because of the amount of salary that is received. In non-profit organizations there are obvious challenges when it comes to providing competitive salary and benefits to attract and keep the best staff. If Family Christian Health Center could market their strengths, it would make...
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...Knotted forever… By Amit Pande & Sandeep K Krishnan In an ideal merger, the newly created entity pools the best features of the two merging organizations. A well planned process built on the foundations of an open, honest and consistent communication strategy can pave the way. Mergers and acquisitions have become a common phenomenon in recent times. A merger of the size like HP-Compaq has implications for the workforce of these companies across the globe. Although the merging entities give a great deal of importance to financial matters and the outcomes, HR issues are the most neglected ones. Ironically studies show that most of the mergers fail to bring out the desired outcomes due to people related issues. The uncertainty brought out by poorly managed HR issues in mergers and acquisitions have been the major reason for these failures. The human resource issues in the mergers and acquisitions (M&A) can be classified in two phases the pre-merger phase and the post merger phase. Literature provides ample evidence of difference in between the human resource activities in the two stages: the pre-acquisition and post acquisition period. Due diligence is important in the first phase while integration issues take the front seat in the later. The pre acquisition period involves an assessment of the cultural and organizational differences, which will include the organizational cultures, role of leaders in the organization, life cycle of the organization, and the management styles...
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...Knotted forever… By Amit Pande & Sandeep K Krishnan In an ideal merger, the newly created entity pools the best features of the two merging organizations. A well planned process built on the foundations of an open, honest and consistent communication strategy can pave the way. Mergers and acquisitions have become a common phenomenon in recent times. A merger of the size like HP-Compaq has implications for the workforce of these companies across the globe. Although the merging entities give a great deal of importance to financial matters and the outcomes, HR issues are the most neglected ones. Ironically studies show that most of the mergers fail to bring out the desired outcomes due to people related issues. The uncertainty brought out by poorly managed HR issues in mergers and acquisitions have been the major reason for these failures. The human resource issues in the mergers and acquisitions (M&A) can be classified in two phases the pre-merger phase and the post merger phase. Literature provides ample evidence of difference in between the human resource activities in the two stages: the pre-acquisition and post acquisition period. Due diligence is important in the first phase while integration issues take the front seat in the later. The pre acquisition period involves an assessment of the cultural and organizational differences, which will include the organizational cultures, role of leaders in the organization, life cycle of the organization, and the management styles...
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...hold CEOs and management responsible for all fraudulent acts committed by an organization. The ethical spotlight has now turned to CEO compensation due to the recent decline in the economy. The focus point of those public discussions has been to try and get a better position to influence CEO compensation packages. Determining a CEO compensation package and commitment that does not place undue pressure on the CEO to taint financial statements, provide excessive perks, approve stock option scandals to occur, and let outrageous severance packages could be a giant step in the right direction toward an ethical foundation in the business community. Perhaps CEO compensation packages are not the cause of corporate scandals, but sometimes they do push CEOs into making improper and unethical decisions. The relationship between CEO compensation is parallel to being an ethical company, and having long term success Executive compensation has risen significantly in past ten years. These increases are difficult to comprehend considering profits and stock prices of the only increased by 11% and 23% respectively as of 2008. Although the increase in market value created an environment for increasing compensation without much criticism from outsiders, are these levels ethical? The economic principle of supply and demand offers an explanation of the compensation market equilibrium. A job has economic value to the employer that created the position. The price to fill the position is determined by...
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...mission is whole foods, whole people, whole planet. The Whole Foods company strategy reflects the company mission. Their whole foods mission is achieved by offering a wide variety of food and non-food items that are organic or natural. They source their products locally and usually have stricter store guidelines for the definition of “local” requiring a shorter maximum distance for traveling. “Locally grown” n.d. Their standards of quality are high and they strive to provide products that are fresh, safe and support well being. They have a list of unacceptable ingredients for food and quality standards for other products. “Quality standards” n.d. Their mission of whole people is achieved through the formation of teams at the store level. The teams manage themselves and are encouraged to make decisions about their department they are responsible for. Compensation is in part from stock options so they are invested in the profitability of the store. Fortune magazine has listed them as on the top 100 companies to work for for 13 years in a row now. Team members can go on field trips to visit suppliers and have access to a company wage report to see everyone's salary. “Fortune 100 Best Companies” (2013) The average hourly wage is $16.98 and John Mackey, CEO has drawn a $1 salary since 2006. Their mission of whole planet is achieved by having a social responsibility strategy. They support animal welfare and have created the Global Animal Partnership...
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...Ali DeLara Date: 01/06/13 Case Assignment #1 Does the Whole Food Market Strategy reflect their mission? The Whole Food Market (WFM) mission “Whole Food, Whole People, and Whole Planet” is made up of seven core values: selling the highest quality natural and organic products available; satisfying and delighting customers; supporting team member happiness and excellence; creating wealth through profits and growth; caring about the communities and the environment; creating ongoing win-win partnerships with suppliers; and promoting the health of their stakeholders through healthy eating education.(Thompson, Peteraf, Gamble, & Strickland. (2012)) WFM has developed strategies to fulfill each of the seven core values which make of their mission. Highest Quality Goods WFM’s product strategy is to provide customers with the highest quality natural and organic products available in the market. In order to achieve this goal they work with the suppliers and personally inspect the quality of each product before it placed in their stores. They also work with local and regional suppliers to ensure that their customers receive the freshest most seasonal products (Thompson et al., 2010). They will own purchase products from those suppliers who are dedicated to sustainable agriculture which are environmentally sound.( Thompson et al., 2010) Satisfying and Delighting Customers The pricing strategy is to provide the best prices for the highest quality natural and organic products. WFM...
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...BUS 681 Entire Course Compensation and Benefits http://www.devryguide.com/downloads/bus-681-entire-course-compensation-benefits/ To purchase this tutorial copy and paste link in your browser. BUS 681 Entire Course Compensation and Benefits Week 1 Compensation Strategy. Discuss the general goals of an organization’s compensation system, including how a compensation strategy works to support the organization’s business strategy. Respond to at least two of your fellow students’ postings. Compensation Practices. Discuss the various factors that influence a company’s competitive strategies and compensation practices. Assess how a company can mitigate these factors using effective compensation practices. Respond to at least two of your fellow students’ postings. Journal Article Research and Analysis. Using a variety of research techniques, write a 3-5 page essay that summarizes the impact and affect of compensation within an organization. This essay should be based on research obtained through a minimum of three Journal articles. Week 2 Seniority and Merit Pay. Define the concept of seniority and merit pay plans, including the strengths and limitations of such plans within an organization. Discuss the job, organizational and/or other factors that should be considered when deciding between the two. Respond to at least two of your fellow students’ postings. Incentive Pay Plans. Discuss how incentive pay plans – both individual and group – motivate employees to achieve...
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...Bachelor of Science in Business (BSB) undergraduate degree program is designed to prepare graduates with the requisite knowledge, skills, and values to effectively apply various business principles and tools in an organizational setting. The BSB foundation is designed to bridge the gap between theory and practical application, while examining the areas of accounting, critical thinking and decision-making, finance, business law, management, marketing, organizational behavior, research and evaluation, and technology. Students are required to demonstrate a comprehensive understanding of the undergraduate business curricula through an integrated topics course. The Human Resource Management Concentration helps students develop an understanding of the fundamentals of human resource management and its strategic relevance in business. The concentration addresses the legal and ethical components of the decision making process involved in the human resources environment. The Human Resource Management Concentration introduces students to the basic concepts of human resource management, and allows further study in the areas of employment law, risk management, recruitment and selection of employees, international HR, change management, compensation and benefits, employee development, and performance management. Students will also develop an understanding of the critical business implications for human resource professionals today and in the future. HR practitioners and managers must be equipped...
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