Question

Refer all answers to comensation Management subject

1a. Pay system is designed to acheive compensation objectives. Describe FOUR (4) compensation objectives.

b. Explain FOUR (4) various pay cash compensation.

c. Explain FIVE (5) typical data collected for job analysis

d. Describe FOUR (4) Purposes of an aligned internal structure

Answer 1

The answer to Q 1a: Compensation Objectives:

According to authors and research scholars, the compensation objectives are as follows.

1. Attract and acquire qualified personnel: In the age of competition, the organizations need to attract highly skilled personnel to achieve sustainable competitive advantage. The organizations provide the best compensation to attract such skilled candidates.

2. Retain the existing employees: The employee turnover costs the organization financially and non-financially. It is important to retain existing employees and reduce employee turnover costs. The organizations offer competitive compensation to retain existing employees.

3. Reward the desired behavior: In order to motivate the employees and encourage positive behavior, the organization offers competitive compensation. The compensation is designed to reward performance, loyalty, experience, and other positive behavior of employees.

4. Equity: As per equity theory, when the employees feel inequity in the rewards against efforts, they feel demotivated and may leave the job. Compensations are effective measures to ensure equity among employees.

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The answer to Q 1b: Various pay cash compensation:

According to Milkovich, there are four elements of cash compensation.

1. Base wage: This element of cash compensation is paid to the employee for the service provided. The base wage ignores the differences in attributes and individual capacity, so the base rate is the same for the employees at the same level. For instance, for the machine operator, the base wage is $30.

2. Cost of living adjustments: The base wages are changed periodically to meet the expenses related to the cost of living. Apart from the cost of living adjustments, the firms provide merit increases based on the past performance of the employee.

3. Short-term Incentives: Short term incentives are tied to the performance of the employees. It is different from a merit increase. incentives are the cash given to the employees, while in merit increase the base wage is increased.

4. Long term incentives: In the long term incentives, the organizations offer the stock options or stock ownership to the employees who fit in the criteria.

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The answer to Q 1c: Typical data collected for job analysis:

While performing the job analysis, the manager needs to collect the following data.

1. Work and duties: As an employee what would be the duty of an individual, what tasks the individual will perform, what equipment will be needed, and what will be the level of complexities in the task information is collected.

2. Physical environment: This element is related to the temperature, humidity, noise, and other information related to the physical environment of a job.

3. Tools and equipment: This element is related to the information about various equipment used by the job holder. For instance, a computer system, protective clothes, helmets, etc.

4. Internal and external Relationships: This is the element is related to the relationship with the subordinate and supervisors; as well as external individuals.

5. Job requirements: The knowledge, skills, and abilities of a job holder are necessary to be collected. This information is useful in fulfilling the basic requirements to perform the job.

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The answer to Q 1d: Purpose of aligned internal structure:

1. To support the organization's overall strategy: An organization that follows cost leadership strategy needs to align the compensation strategy that saves the cost. On the other hand, the differentiation strategy is achieved through the best compensation in the market.

2. To support the workflow: It is important to identify the importance of each element of the process and design the compensation accordingly.

3. To ensure fairness: The internal pay structure should not create inequity among the employees. The perceived inequity reduces morale.

4. To encourage positive behavior: In order to coincide with the organizational goals and individual goals, the internal structure should be aligned.

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