Assignment 1 BUS 409

Assignment 1 Arlene Miller Professor Fitzpatrick Compensation Management BUS 409 October 30, 2011

Assignment 1 BUS 409

Describe the three main goals of compensation departments. The compensation departments main goals are: internal consistency, market competitiveness, and recognition of individual contribution. Internal consistency compensation defines the value of each job among all jobs in a company. This represents the hierarchy of the set of jobs. Companies use a simple but fundamental principle for building this system, it is the more an employee has whether more qualifications, responsibilities or more duties are and should be paid more than the employees that are less qualified, have less responsibilities and less job duties. Internal consistency compensation recognizes the differences in job characteristics and pay is based on that. Job analysis and job evaluation are used to define the value of jobs. Job analysis is a process used to gather, document and analyze information to describe the different jobs content, such as, duties, requirements, and sometimes working conditions. Job evaluation is used to recognize the differences in worth among the different jobs and to set pay accordingly. Job analysis is descriptive, job evaluations reflect the value and importance management places on a different positions. Market competitive pay systems play an important part in attracting and keeping the most qualified employees. Based on market and compensation surveys, compensation professionals build a market competitive compensation system. Strategic analysis is used which is an examination of the external market context and internal factors of a company. External market context is the industry profile, information about competitors, and long-term growth prospects (pg 22). Internal factors consist of the companys financial condition, their functional capabilities (pg 22). A strategic analysis lets professionals see where they stand against other professionals. Compensation surveys collect and analyze competitors information, mainly focused on wages and salary practices. Benefits are also surveyed because a companys benefit

Assignment 1 BUS 409

package is a key part of an employees salary package. Compensation surveys play an important part because they are used to get a good view of competitions wage practices which can help a company attract and keep an employee. Pay rate differences for jobs and the differences in employee contributions are represented by pay structures. Since no two employees have the exact same qualifications, credentials, or perform duties equally, they are recognized by differences in pay, this is recognizing individual contributions, pay based on knowledge, credentials and performance. A well designed pay structure should show the value the company sees in their employees. Human resource professionals group jobs into pay grades based on similar factors and values, though there is no single formula to get pay grades. Pay ranges include the minimum to maximum value of a pay rate and is built on the pay grade. Describe the contextual influence that you believe will pose the greatest challenge, and the contextual influence that will pose the least challenge to companies competitiveness and explain why. The contextual influence that I believe to pose the greatest challenge to companies competitiveness is outsourcing jobs to other countries. When a company outsources jobs to another country the salary or wages paid are a lot less, and also the laws and restrictions are less but it takes away from people in the U.S. being able to find a job and work. The competitiveness between companies that outsource compared to companies that hire workers in the U.S. are the outsourcing company can take jobs at less money than the company in the U.S because the company in the U.S has to pay at least minimum wage and has laws and restrictions to follow. The company outsourcing will be seen making a profit whereas the company in the U.S. paying

Assignment 1 BUS 409

higher wages will be seen maybe making a profit but it would be small compared to the other company. The contextual influence that I believe to pose the least challenge to companies competitiveness, I think, would be the companies that run with very little competition, such as, the U.S. defense industry and public utility companies. These companies are the only ones that supply this product so they make more of a profit and also can up their prices for the product which increase their profits and can pay their employees higher wages. They also attract more people due to the higher wages and the fact there is little to no competition. Describe when subjective performance evaluations might be better (or more feasible) than objective ratings. Subjective performance evaluations might better than objective ratings when a person is working in the public service field, such as, customer service representatives, retail sales, cashiers, etc. Subjective performance evaluations are measured by the quality of work of an employee and how they are with people or animals in their workplace or job. Objective ratings are numbered quantity; these ratings would be best used in manufacturing jobs, assembly jobs or production, where the number of items you have completed, sold or produced is the main part of the job. Describe under what conditions profit sharing plans are not likely to motivate employees. Profit sharing plans are not likely to motivate employees when an employee cannot or does not see a link between their efforts or duties and the profits made. Hourly employees, which include assembly line employees, have the most problem seeing the link between them and the profits because they are on the bottom of the ladder, so to speak. They may feel they are such a

Assignment 1 BUS 409

small part of the whole and may feel like just another worker and that corporate does not think of them as an integral part of the process. Based on your knowledge of pay-for-knowledge pay concepts, describe three jobs for which this basis for pay is inappropriate and explain why. Three jobs for which pay-for-knowledge pay concepts are inappropriate for are: janitorial, fast food and retail jobs. These three jobs require no prior experience in anything nor does it require any type of schooling, training or skills. The job duties for these types of jobs can be and are taught on the job, cash register use, stocking, cleaning and handling money or merchandise are easily learned and taught so a pay plan of pay for knowledge would be inappropriate for these and many other types of jobs.

Assignment 1 BUS 409

References Martocchio, J. J. (2011). Strategic compensation: A human resource management approach: 2011 custom edition (6th ed.). Upper Saddle River, NJ: Prentice Hall.