Human resources questions and answers

Compensation Philosophies

Up to this point, I have encountered two compensation systems. One was based on commission, and the other was a fixed salary. The first salary computation method was registered during a temporary position and it did not guarantee any income, only part of the sales registered. The outcome of such a philosophy is that of increased motivation to sell and as such motivation for high performances (Flannery, Hofrichter and Patten, 2002). The downside is however that of the employee not being able to rely on a steady income, and the frustration which comes with such a situation. The second compensation philosophy has the advantage of ensuring reliable incomes and allows the employee to make personal plans and as such commit to the job, yet their motivation for increased performance could be decreased (Berger and Berger, 2008).

Coordinated system of compensation

Within a large size entity (of 180 employees), a coordinated system of wage determination and payment is imperative. In order to develop such a system, the following steps would be implemented:

The analysis of all jobs existent within the firm in terms of priority, importance as well as responsibilities assigned and KSAs (knowledge, skills and abilities) required from the occupant of the position

The analysis of all employees within the organization through appraisal systems, with the aim of identifying their appropriateness for the jobs occupied

The correlation of the KSAs with the job responsibilities and performances

The creation of an internal grid of salaries for each position within the firm

The allocation of insurance and other mandatory pay (Louisiana Workforce Commission)

The measurement of the efficiency of the established system (Snell, 2010).

Chapter 12 questions

1) Pay for performance plans

Throughout the past recent years, the compensation of employees based on their performance has become more and more popular and this is the result of the two specific features. On the one hand, the system motivates the employees to work harder and improve their performances in order to gain increased salaries. On the other hand, it allows employers to save on their personnel expenditures by granting higher salaries only when these are linked to high employees, and subsequently, organizational performances (Brown and Heywood, 2002).

Despite its popularity, the system is quite complex and requires several elements in order to succeed. For instance, it is necessary for the managerial team to set clear goals; to understand and address the challenges; to integrate the performance-based system at a leadership level; to develop quantifiable metrics; to provide and receive feedback and to use benchmarking techniques (Gilbert, 2010).

2) Executive compensation in U.S. industries

The compensation of executives is often a combination of fixed salary, plus a significant bonus upon organizational performance (Bebchuck and Fried, 2006). The main issue with this system is represented by the large sum of the compensation, which is often perceived as inequitable in report to the salaries and other compensation forms granted to the organizational staff members. This complaint is however counter argued with the large responsibility carried by the executives.

Aside from the equity towards other organizational employees, the compensation of the executives also raises the issue of equity and instability within the modern day economic context. This problem was mostly raised within the financial sector in light of the credit crisis, but is now also being addressed in other companies as well. The focus as such now falls on responsible governance (Muller, 2012).

Chapter 13 questions

1) Strategic importance of benefits

Today, the dynamics of the business environment are suffering dramatic challenges, emerging from various fields. Customers for instance become more demanding; the domestic and international competition intensifies; the technologies rapidly evolve and there is increased social pressure towards environmental sustainability (Brooks and Weatherson, 2000). In such a setting, it is imperative for the economic agents to rely on their staff members to help address these challenges. Today then, the employees are no longer just the force operating the machines, but they are the most valuable organizational asset (Mayo, 2001). In the creation and implementation of the benefits, it is essential for the employers to consider the differences between the motivating factors of various employees.

2) Health care costs

The health care situation in the United States has been growing more and more severe as the medical act become more solicited, as well as more expensive. The aging of the population, the increasing living standards or the technologic advancements all increase the costs of health care (Weinberg, 2007). And these costs are reflected at the level of employers, who are less and less able to ensure full medical coverage for their staff members, and this materializes in employee dissatisfactions, pressures and even conflicts between employers and employees.

The issue of the rising health care costs nevertheless is one of national importance, with ramifications obvious not only within the business climate, but at the level of the entire society. In such a setting then, it is believed that a solution should also be supported by the state, rather than economic agents alone (Shi and Douglas, 2011).

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