Historic Process By Which Strategic Essay

Length: 20 pages Sources: 5 Subject: Business - Management Type: Essay Paper: #80294169 Related Topics: Merit Pay, Pension Plan, Aig, Workers Compensation Law
Excerpt from Essay :

Concerning employment practices in general, the order not only strictly prohibited discrimination in hiring, but it also entered into the lexicon the now commonplace idea of Equal Opportunity Employment and established the premise of Affirmative Action. In doing so, this order would also explicit the prohibition of discriminatory treatment of employees once hired, seeming to build a legal case for those who would argue that a compensation system demonstrates elements of individual discrimination.

6. Explain the sorts of errors that can arise in the performance appraisal process.

The quality of an organization's project will only be as good as the performances which are dedicated to its completion. Thus, it is central that proper oversight and leadership acknowledge individual and group performance markers in order to properly interpret the ongoing effectiveness of meeting a project's goals.

A crucial and preemptive approach to ensuring that project contributors are meeting expectations is to provide in advance all such contributors with benchmarks of achievement. This way, individuals are made aware of concrete and easily definable responsibilities. "The importance of establishing baseline measurement" is both instrumental to maintaining a gauge for performance quality and to ensuring that project contributors know how to read and respond to this gauge.

TSG, 1) Indeed, one of the most likely shortcomings in a performance evaluation process is the failure of organizational leaders to properly arm employees with the knowledge required to meet expectations. Here, we find that clarity becomes a key to success in both encouraging and gaining desired employee performances.

It is also important to tailor evaluation strategies to individual strengths and abilities. As such, proper performance monitoring will be stimulated by close interaction between management and those under consideration, with a project's advancement hinging on proper exploitation of talents and virtues. The breakdown in rapport between leadership and personnel is a critical factor which might derail the real value of conducting performance assessments. This can lead to critical errors in comprehending that which a person is or is not contributing to the organization's overarching goals and objectives.

7. Summarize some possible limitations of merit pay programs.

The single greatest conflict in the execution of a merit pay program is the demand which it implies for excess compensation resources which can be used to differentiate the pay raises entitled to those meeting performance-excellence standards and those who are simply entitled to the average compensation increase that is standard. The result is that in many organizations where compensation resources are limited, it becomes very difficult to implement this strategy with any real nuance.

Particularly, employers run into a danger of failing to create a significant enough numerically gap between that which is offered the 'average' performer and that which is given to the performer whose merits have warranted a meaningful compensatory increase. On the flip side of this coin, the idea of failing to offer compensatory increases even to those who are not merit-based performers will provoke a danger of negatively impacting morale and leading to high levels of employee turnover. It becomes extremely challenging for the organization then to simultaneously offer motivations for performing to a standard of excellence while ensuring that all members of an organization are compensated fairly and competitively.

The ultimately outcome of this condition, therefore, is a circumstance where merit pay tends to lose much of its meaning while at the same time risking the alienation of the average performer. This means that such an approach to compensation should probably be reserved for those companies that are possessed in the resources to execute it without these limitations.

8. Explain five key factors HR professionals and line managers should consider when designing an incentive pay plan.

An incentive pay plan will only succeed if executed with the most sensible of implementation processes. First and foremost, HR professionals should be aware of the resources which are available for distribution. The financial standing of the organization will be a key to defining the nature of an incentive-based plan. Two other key factors are the degree to which an incentive pay system is planned within the context of existing organizational goals and the effectiveness and clarity with which this system is explained and justified to personnel. To the point, research denotes that "strategic communication and implementation of a plan can help increase the overall effectiveness of the compensation and economy, the public perception of the product or service in question, and the manner in which competitors and industry counterparts are approaching compensation all should be evaluated in designing an incentive pay plan. A fifth factor for both HR professionals and line managers, but perhaps the most pressing, is the conformity to organizational culture in the design of such a program. This means that issues of diversity, hierarchical structure, interpersonal dynamic and shared ethics are all central in informing the care and precision with which such a plan is implemented.

9. Describe how well incentive pay plans fit with the two competitive strategies.

The incentive pay plan can actually be one of greater flexibility for those with the resources, especially during such economic recessions as today's. The notion that one must earn that which he or she is promised through the meeting of performance expectations tends to establish a more direct connection between organizational revenue stream and individual compensation. Thus, where the competitive strategy of price competition is concerned, this becomes an extremely effective way of achieving competitive dominance through increased volume. If this is dependent upon a sales team, for instance, the notion of rewarding bonus compensation opportunities or higher base pay for those members of the sales team that have effectively moved the type of volume to enable health price competition, the opportunity for benefit is to be seen as mutual between individual and organization.

With respect to competition under the differentiation model, incentive pay should be enabled with the understanding that either innovation or product distinction will lead to a rapid pace of growth. The notion under the terms of differentiation that uptake of product use, one it occurs, will be fast and exponential means that there is a benefit to initiating early incentive pay as a way to help personnel bridge the gap between introduction and uptake. Once this latter phase occurs, incentive pay will quickly justify itself as way to help sales personnel get over the hump of consumer wariness.

10. Summarize the advantages and disadvantages of pay-for-knowledge pay programs.

The pay-for-knowledge program is a rather progressive way of understanding both that which motivates the individual growth of an organization's personnel and that which uses compensation incentives as a way to improve the value of individual members. The knowledge-based pay strategies comes with a notable set of advantages, chief among them, the internally constructed path to expanding one's earning capabilities and one's flexibility within the organization. By making pay a function not necessarily of that which one's accomplishments justify but of that which one's training and versatility makes possible means that the organization has provided a clear a definable incentive for achieving an expanded (rather than heightened) role in day-to-day and longterm operations.

Perhaps the biggest disadvantage to applying this approach to compensation is that we simply lack the empirical verification of its effectiveness. Though both intuition and rationality tell us that the wider array of employee capabilities within the context of an organization will ultimately be worth greater financial compensation, to date, we are given little in the way of scientific reinforcement. This means that an organization may largely be left to its own resources in designing, implementing and evaluating such a program.


1. Describe the four alternative job-content evaluation approaches given in the text: simple ranking plans, paired comparisons, alternation ranking, and classification plans.

The job-content evaluation approach selected will depend heavily upon the nature and spectrum of jobs for which compensation is to be offered. The Simple Ranking Plan, in accordance with its name, is the least detailed or nuanced of approaches. By employing a single metric such as the degree of revenue stream effected by a given job responsibility (just as an example), an organization can establish a hierarchical value for each job. The outcome should be a single itemized list which ranks the importance of each job and, as a result, helps to justify the value placed on compensation for every permutation of job responsibilities. Naturally, this is an approach which is more applicable and meaningful in smaller organizations where such ranking is a manageable task.

The Paired Comparison is a method which likewise catalogues the array of jobs which are expected within an organization, but by contrast, sets them into rationally related pairs. The importance of the jobs within each pair will result in the assignment of a point value of either '1'…

Sources Used in Documents:

Works Cited

Chingos, P.T. (2002). Paying for Performance. John Wiley and Sons.

Harris, M. & Raviv, a. (1979). Optimal Incentive Contracts With Imperfect Information. Journal of Economic Theory, 20(2), 231-259.

Henderson, J. (2005). Compensation Management in a Knowledge-Based World. Prentice Hall.

Herbig, P. & Genestre, a. (1997). International Motivational Differences. Texas a&M International University: Department of Management and Marketing.

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