Question

Managing compensation costs, headcount, and participation/communication issues

Cisco systems, Hewlett-Packard, American Airlines, and General Motors are examples of companies that have cut employment or cut wages and/or benefits to reduce labor costs in hope of becoming more competitive and more profitable. Indeed, American and GM went through bankruptcy in part to gain control over labor costs. In contrast, some companies- Southwest Airlines, Nucor, and Lincoln Electric- have a no-layoff practice and do not appear to have cut wages or benefits even in years when sales have declined significantly (They have also not gone through bankruptcy).

What is the difference between these two sets of companies? Is it simply that one set of companies cares more about its employees than the other set of companies cares about its employees? Or, is it also the case Southwest, Nucor, and Lincoln Electric have set up their compensation strategies in a way that makes them more able (than Cisco, HP, American, and GM) to cut labor costs when times are tough? What about protecting investment in employees and employee relations?

Answer 1

Answer-

Structuring of a pay framework needs to consider, numerous components, on which organization's long haul association with workers just as its compatibility as a favored boss depends to a bigger degree. Some of such factors have been examined beneath.

1. The remuneration framework ought to be adaptable and should keep pace with the changing busiess situation. The activity jobs and remuneration should be reclassified by the time with the goal that unexpected and terrible circumstances like cutbacks or pay cuts might be dodged. There ought to be space for such nonstop changes.

2. Some portion of the pay ought to be connected to the person's presentation, while some portion of it ought to be connected to associations' money related outcomes, so extreme occasions can be taken care of effortlessly.

3. While structuring a framework, Besides HR, the Marketing, Operations, IT, Strategy and Finance heads ought to be asked of their supposition in order to have prescience of the business situation after state five years, and the difficulties the organization may look during these years and their likely effect. The framework ought to be benchmarked with the best business rehearses, and yet it ought to incorporate with the organization's biological system.

4. Pay receptiveness strategy, however far from being obviously true, has its beneficial outcomes on worker resolve. It empowers the way of life of transparancy and responsibility in the association and anticipates awful choices with respect to policymakers and supervisors. Through compensation transparency, the worker would have the option to rate himself/herself in a superior manner and settle on right vocation choices. It will build generally speaking profitability as the representative will feel more imparted and engaged with issues of the organization.

Subsequently, the Pay Openness Policy ought to be a basic piece of pay arrangement of a Modern day association.