Florida company's strategies for achieving global growth

Human Resources

Pay Decisions at Performance Sports

The first thing employers have to consider when developing compensation packages is equality. It is extremely important that businesses maintain internal and external fairness. Internal equity has to do with the fairness that exists between employees in the same business. External equity has to do with the relative wage fairness when compared to wages with other companies. Regardless of the compensation level, if either internal or external equity is not right, a business will often experience employee dissatisfaction. Employees will often begin to balance their performance through a variety of ways like decreased productivity to absenteeism and eventually to leaving the company altogether (Fogleman, 2004).

Broad banding is one way that can be used to determine a fair wage. This is often done by a market survey. These are normally fast and an easy way figure out compensation guidelines for many organizations. By making a few phone calls to other, similar businesses it can be determined what the market value is for a specific job. Five competency levels have been developed in order to classify employees according to three different criteria. These include authority to make decisions, skill level and supervisory capacity. Every employee can be classified by job title and competency level by using a capability scale. Employees who have similar skill levels or competency are grouped together in compensation bands despite their job title. These bands then compensate like employees at like rates across the entire organization and serve to maintain both internal and external equity (Fogleman, 2004).

In the traditional way, pay is thought to be an entitlement that employees get in exchange for showing up at work and doing well enough to avoid being fired. While base pay is awarded to employees with no consideration for performance, incentives and bonuses are extra rewards that are given on top of that in gratitude of a person's extra efforts. Pay-for-performance is a new way of doing things that is moving away from the traditional entitlement concept. A pay-for-performance plan adds to the base pay or merit increases in order to reveal how highly employees are rated on a performance assessment. In this new merit pay system, other incentives and bonuses are figured in a way that results in substantially more total dollars for highly ranked employee performance. Often employees also receive an end-of-year lump sum bonus that is not included in their base pay (Employee Compensation, 2010).

Perkins and Balkin can choose to do any types of compensation plans that they want to. They can have plans for different areas within the organization. For example, everyone in the company could be on an hourly compensation plan while say the sales department could be on a pay for performance plan. The key is to make sure that everyone that is within a department is on the say type of plan so that everything is kept fair and ethical.