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    1. Should the federal government place a ceiling on CEO compensation? Why?

    2. What are some of the advantages and disadvantages of a merit-based compensation system?

    3. Why is pay compression a potential problem in terms of employee morale?

    4. Should employee pay amounts be kept a secret? Why?

    5. What gain-sharing system do you believe is the most effective? Why?

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    Solution Preview

    Hi there,

    Here are your answers:

    1. The federal government should not place a ceiling on CEO compensation because our country's economy is founded upon a free market system. Once we cross that line, then we slowly creep over to a communist based system where the government places an artificial limit on what someone can earn for a living.

    2. The advantage of this kind of system is that it rewards those people who truly deserve to be rewarded for their actions. The disadvantage of this system is that in some cases, merit is not always quantifiable. In those cases where merit is subjective, some people may be taken advantage of by their superiors because their superior can subjectively say that their work does not merit extra compensation.

    3. Compression, simply defined is a method of identifying based pay inequities within an organization. Pay inequities exist in all public and private sector organizations and may be caused by:
    Overtime, Reassignments & Transfers, Demotions, Talent Acquisitions

    Compression occurs when the base pay of an employee in a job classification is lower than the pay level calculated based on length of service within the assigned salary range. It is a problem because some people may feel like they are on the receiving end of an inequity.

    4. They should be kept confidential in order to minimize internal conflict within the office.

    5. Gainsharing: A technique that compensates workers based on improvements in the company's productivity.
    How does Gainsharing work? A Company shares ...