Review the components contained in 'A Pay Model' assessing the objectives, techniques, and policy components of the Pay Model. Based on your own experiences in the workplace, analyze how these three major components are linked together to establish the total compensation program . Evaluate the effect of these relationships on the culture and values of the organization. Include identified external and internal factors in your assessment.
Analyze how strategic total compensation perspectives reflect the organization's culture and values.
Evaluate the internal and external factors effecting various pay structures and the pay model in organizations.
Review the components contained in 'A Pay Model' assessing the objectives, techniques, and policy components of the Pay Model.
Compensation refers to all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship (Milkovich& Newman, 2002).
Source: Milkovich& Newman, 2002
The Pay model helps understand the compensation system in a structured way. The three main components of the Pay Model are the objectives of the pay system, the policies that form the foundation, and the techniques that link the policies to the objectives.
Compensation systems are designed to achieve the organization objectives which include efficiency, equity and compliance with rules and regulations (Sankuraj,n.d.).
Efficiency could be in the form of improved performance, better quality and delighted customers or lower labor costs.
Fairness or equity objectives are to design pay systems that reward performance and satisfy needs. Fairness is the very foundation of compensation. It means that employees are treated fairly and the pay compensates the employee for the work rendered.
Conforming to the various central and state wage legislations and regulations is integral if an organization wishes to stay free from the clutches of the law. The pay has to be adjusted with the changing legal scenario.
The policies should address internal consistency, external competitiveness (or alignment), external competitiveness, employee contribution and administration of the pay system. These four are the pillars on which the pay system policies are founded.
Internal alignment or consistency is used for determining pay rates for similar and different types of work. Skills and jobs are assessed in terms of their relative contributions to the organization's objectives. Internal consistency is crucial and affects all the three compensation objectives. When it is perceived to be fair it retains employees, it motivates employees to improve and undergo training so they are paid more .This improves efficiency.
External competitiveness is about paying your employees with reference to what your competitors are paying. Pay should be sufficient to attract and retain good employees. It should also ensure that pays are not so high that it affects the competitiveness of the company's products and services in the market place.External competitiveness affects the efficiency and equity objectives.
Employee contribution ...
The Pay model and all its components are described. Also describes is the influence of pay on culture and values and also the internal and external factors impacting pay models.