Compensation Policies
Review the narrative below, respond to the discussion questions, then reply to one other student.
Major policy decision must be made about the comparative level of pay the organization wants to maintain.
There are three different policies:
1. “At market” – that is, to match the “going rates paid to employees by competitive organizations.
2. “Lead the market” – by paying above market rates. And in contrast,
3. Some employers choose the “lag market” – by paying below the market.
What is the strategy behind each policy and give some examples? What policy is your company following, and is it effective? If not, what would you recommend?
A clear trend in strategic compensation management is the growth of incentive plan, also called variable pay programs and research reinforces the need to take a strategic approach to variable pay in order to remain competitive in a tough market.
The two most common types of incentive plans are:
1. Individual incentive plans – examples: piecework, bonuses, lump sum merit pay, sales incentives, etc.
2. Group incentive plans – examples: team compensation, Scanlon plan, Gain Sharing, Improshare, etc.
Required Reading:
Sammer, J. (2015). TAKE IT OR LEAVE IT: Should salary discussions be a one-way street? HRMagazine, 60(7), 34-39. Retrieved from ProQuest Central in the Touro library.
Massingham, P. R., & Tam, L. (2015). The relationship between human capital, value creation and employee reward.Journal of Intellectual Capital, 16(2), 390-418. Retrieved from EBSCO multi-search database in the Touro library.
