Foundations of a Compensation Strategy: Purchasing Manager
Human resource efforts of the company such as performance evaluation and management, career progression and management, as well as recruitment are all clearer and better communicated to employees if consistent to the compensation strategy (Broderick & Milkovich, 1989).
A good compensation program is a program designed to “communicate and reward strategic goals” of the company, which increases the possibility that the employees will understand and achieve the company’s goals (Broderick & Milkovich, 1989). It should be designed to attract, motivate, retain the kind of employees that drive the success of the company, fully proficient, and meets company expectations (Payscale Consulting, 2011).
The position chosen for this paper is the position of a Purchasing Manager. The primary functions of a Purchasing Manager is to plan, direct, coordinate, and oversee the activities of purchasing officers and personnel in purchasing materials, equipment, and services. It is also the responsibility of the Purchasing Manager to interview and hire department staff, represent the company in contract negotiations and policy formulation with suppliers, and resolve any claims or grievances against suppliers and within the department (Career Planner, 2011).
Pay or compensation is determined based on industry standard and level of performance of the person. Industry standard places the average monthly salary range of a Purchasing Manager at $4,300.00 - $5,200.00 (Glassdoor Inc., 2011). This amount is based on salary surveys of Purchasing Managers of companies in the same industry across the country. Salary surveys can be found online, or the human resources can conduct their own informal survey and communicate with other human resources personnel in different companies across the state.
The company’s internal structure and environment should also be considered in determining pay. For example, based on the company’s organization table, a Purchasing Manager is on a similar level as the Accounting Manager. An Accounting Manager in that company is paid a salary range of $4,400 - $4,900. Compensation for either one, or both, should be adjusted so that each would fall within industry standards but still in the same range as the other (Broderick & Malkovich, 1989).
Compensation adjustments should also be made depending on the policies of the company. Some companies provide compensation increases based on compensation adjustments industry-wide, market compensation adjustment in the region, tenure of the employee, or employee’s performance of the job. The common benchmark for compensation increases companies use the employee’ performance (O’Byrne, 1995).
This type of compensation strategy, usually employed by most companies, integrates the company’s expectations of the employee and ensures that the employees’ work is at par with the company’s standards, mission, and goals.
Broderick, R.F. & Milkovich, G.T. (1989). Developing a compensation strategy. CAHRS working paper series, 89(19). Retrieved from http://digitalcommons.ilr.cornell.edu/cgi
Career Planner (2011). Purchasing manager: Job description, duties, and jobs. Retrieved from http://job-descriptions.careerplanner.com
Glassdoor, Inc. (2011). Purchasing manager salaries. Retrieved from http://www.glassdoor.com/salaries
O’Byrne, S.F. (1995). Total compensation strategy. Journal of applied corporate finance, 8(2). 77-86
Payscale Consulting (2011). Compensation philosophy and strategy. Retrieved from https://www.payscale.com