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Human Resource Open Forum

1. Organization's strategic approach to managing compensation is?

2. What is the advantage of pay-for-performance versus a pay-for-time approach? Can the pay-for-performance be used in a union environment? If so, what are some potential problems that may arise?

3. What are the advantage and disadvantage of an appraisal done by the customer? Provide some specific examples.

Solution Preview

1. There are several issues when it comes down to managing compensation:
compensation must be:
- fair/acceptable for the payee
- incentive providing
- secure
- cost-effective for the firm

There is some strategic approaches to managing compensation, and some of them include:
External Factors:
- regulations and laws set by the government: there are minimum wage laws, if individuals work overtime, they need to be compensated time and a half, it also includes child labour laws... These rules shape the strategic approach to compensation and are rules that management must incorporate as a bare minimum.
- economic conditions - if the economy is not doing well, the employer might have to make a strategic decision to put a freeze on raises to avoid layoffs
- union rules - some unions have rules for minimum compensation amounts which must be a major part of the strategic way that managers look at compensating the employees.

2. There are advantages for pay-for performance. This essentially means that a person will get compensated more for work that is of higher quality then work that is low quality when they are assessed in their year end evaluation. In other words, if two employees complete a project, one does a better job ...

Solution Summary

This solution answers 3 HR questions, addressing strategic approaches, pay approaches and appraisals.