1. Explain with examples the “total returns” people receive from work
In general, the base wage is the monetary compensation paid by an employer for the work performed in the workplace. It tends to reveal the skill or the value of work performed and removes the differences between individual employees.
For example, the base wage for the machine operator may vary with other operators on the basis of his experience or performance. If a machine operator earns $12, other operators might earn more due to additional skills.
Some organization has a pay system as a direct function of various experiences, skills, and educational attainments of an employee. This scenario is widely common among school teachers and engineers. There also exists a difference between wage and salary. Salary is calculated on an annual basis or monthly basis rather than an hourly basis.
There might also be periodic changes to base wages which will be based on the increment of cost of living, the payment system in the market for similar work, and improvement in experience and skill of the employees.
2. Compensation for many people is an inherently personal and emotional issue. Express your opinion and give an example of how “taking compensation personally,” can play-out on the job.
The assessment of concept within emotional intelligence highlights usefulness along with predictive power in applied settings yet the claim of significance of emotional intelligence to traditional form of intelligence requires more empirical evidences to determine relative contribution of each in the prediction of several criteria. IQ helps as a means to predict various types of vocation for an individual, but its predictive validity seems to decline drastically. The concept of IQ reflecting competence creates an important dimension, but it has often been overlooked or downplayed.
The media has promoted an impression that a high emotional intelligence can reimburse for low IQ and help people flourish despite having below average intelligence which provides a wrong impression about the little importance of IQ.
Although IQ is an important dimension, we parallel to another theorist who provides an extended definition of intelligence create a more realistic and valid evaluation of factors causing personal effectiveness. The new scientific and popular media interest has challenged the long-held beliefs about life success; emotional intelligence provides a clear image of how cognition along with emotion affects life outcomes.
Although the progress of emotional intelligence paradigm can be clearly witnessed, yet further research is needed to prove the relative importance of the traditional and emotional intelligence to predict the specific criterion. The longitudinal research will clarify the relative importance of each in criterion such as work performance in an individual’s career. The direct comparison between the two will add to the enhancement in writings.
3. Explain the key elements of The Pay Model and how it can be used to develop an organization’s pay strategy.
There are mainly seven things to be considered while developing compensation salary. These are explained as follows:
The strategy should be based on organization’s allocation of budget to compensation i.e. salaries and benefits. The compensation budget must be divided into what portion to be spent on salary and what portion of benefits and incentives.
Even when allocating the compensation budget to salary and benefits, the portion of several benefits like health benefits, savings, tuition reimbursements, etc. must also be determined.
The allocation of budget in a similar way can help in reducing labor, health care, and other benefits.
Development of salary ranges
It is important to create an employee pay scale similar to other organizations. In order to be competitive in the industry, it is essential to benchmark jobs and creates a payment structure.
The ranges can be determined by doing research or using various sites like salary.com, etc. to discovery average salaries based on geographical area. However, small organizations ask a vendor to develop it while larger companies make the HR resources to conduct internal research. But it is quintessential to review all the jobs, its criteria, how it is slotted and determine salary ranges for all job descriptions.
Similar to other auditing, it helps to ensure whether the salary ranges showcase the ongoing market trends in an industry. The organizations need to find the competitiveness of the jobs, its market demands, etc. Such discoveries will support in avoiding the loss of competitive employees.
Along with basic wages, some organizations use several benefits packages to retain and to attract valuable employees. A candidate will decide on taking a job or remaining on the same job based on benefits like health, retirement, etc.
Performance Management System
It is essential to develop a performance management system in this era to make sure that employees are fulfilling corporate objectives, and it should be done on a regular basis. This involves creating annual goals, performance appraisals, training and mentoring employees, etc. However, employee productivity can be enhanced directly through compensation strategies.
A proper compensation strategy should fulfill all the legal requirements to make sure the organization is in conformity with all state laws. It will remove the biases on hiring employees and work under the DOL FLSA laws such as minimum wage, overtime pay, etc.
Similar to other business process, the structure is vital for an organization. The organization needs to make an annual review process, salary audit, raise process timeline, etc. to create a proper compensation management.
The compensation strategy helps to create an environment for rewards and recognition for employees to build strong employee engagement. Organizations can be successful by developing structure to hire right people, to manage performance, to reward employees for good performance.
4. Can pay systems be effectively tailored to support differing business strategies? Explain your answer and give an example.
If strategies are to align the compensation or pay systems to business strategies, then various strategies will convert into compensation strategies.
The following example suggests how the compensation system can be incorporated into three business strategies.
The innovator gives emphasis to new products and innovations rather than market trends. In a similar way, employees are rewarded based on less emphasis on skills but more emphasis on incentives and benefits to encourage innovations.
The cost cutter efficiency focused strategy deals with more on minimizing cost and enhancing productivity. Employees are given directives on how a job must be performed to enhance efficiency.
The customer-focused strategy provides importance to customer satisfaction and how well the employees do it.
Thus, different strategies require different compensation approach. A same strategy cannot be applicable for all.