The compensation strategy is derived through the strategy of human resource and it describes the organisation’s position in the job market, the total cash level and the principles of main bonus in the firm along with the rules for the setting of base salary. Compensation comprises of the basic salary and rewards in the form of bonus, leave, expense, insurance, as well as other benefits. The compensation strategy of the human resource is provided an approval from the board of the organisation as the entrepreneur of the compensation strategy is always the top executive’s management of the firm. The strategy has a big effect on the costs of the companies and this is the main reason for the approval from the top management (Sharma, Garg, & Bansal, 2020). The pay market is defined through the compensation strategy which is followed by the organisation. The pay model of compensation along with the benefits helps the human resource to structurally design as well as understand the compensation system of the employees. The model of compensation that is utilised by the firms should be accordance with the objectives of the company. This can help in the determination of the plan that is going to provide most benefit in the long period of time. There are three main elements of the model which are the objective of the remuneration model, the policy which is the foundation for the structure along with the techniques which links the policy to the objectives.
According to the pay model of compensation, the compensation systems are established for the achievement of the objectives of the organisation (ALIKU, MORKA, & IGEMOHIA, 2020). These comprises of the following:
Efficiency- Effective system of remuneration should make a contribution to efficiency in the form of enhanced performance, satisfied customers, lower costs as well as better quality.
Fairness- Fairness means the designing as well as introduction of a reward system which rewards the performance as well as meets the requirements of the employees. Fairness acts as a foundation for health relationship of work, this signifies that it is vital that the employees are provided fair treatment and get a pay which matches the work done by them.
Conformity- The model of compensation has to conform to the needs of different central as well as national legislation as well as regulations of the national salary (Egbewole, Olusesi, & Abdulazeez, 2021). Conforming to the regulations is an important part of a firm which wants to act according to the law. Whenever there is a change in law, there has to be changes in the compensation system.
The internal alignment structure that is followed in ABC company is :
- Scheduling better meetings
- Setting meaningful as well as holistic Key Performance Indicator
- Fostering the cross department relationship
- Celebrate the wins of the company as one team
- Adopting account based marketing
Skill Level a- professional jobs which demands a degree from a university like the doctors and dentists.
Skill Level B- Technical jobs as well as skilled trades which generally demand a college diploma or training as an apprentice like the plumbers and electricians.
Skill level C – Intermediate jobs which generally demands high school or training specific to jobs like the food and beverage servers (Thejasree, 2020).
Skill level D – jobs of labourers which generally provide on-the-job training like the cleaning staffs.
Pay structures are a significant component of effective programs of compensation and it helps in ensuring that the pay levels for a set of job are competitive in an external manner as well as equitable internally. A pay structure which is designed well allows the management to provide reward to the performance and develop skills while controlling the overall cost of base salary through the provision of a cap on the range paid for a specific job or location.
Following is the pay structure of the different Job descriptions:
Doctors- As of 2018, the average annual salary for a Canadian doctor was $ 281,000 for the family doctors, $ 360,000 for a medical specialist and $481,000 for a surgical specialist. the salary of doctors in Canada ranges from $278,000 for psychiatrists and approximately $769,000 for the ophthalmologists.
Plumbers and electricians- The average salary of a plumber in Canada is $58,500 annually to $30 per hour. The position of entry-level start at $49,304 every year and the workers with the most experience gets up to $74,096 every year.
Food and beverage servers- the average salary of a food and beverage server in Canada is $23,333 annually or $11.97 per hour. The position of entry level start at $21,335 per year and the workers with the most experience earn up to $29,250 every year.
Cleaning staffs- the salary of a cleaning staff in Canada is $17.14 per hour.
Doctors- MBBS is the most basic degree which is needed for becoming a doctor. A doctor must have the skills of communication, problem solving, making use of science as well as maths, managing oneself, people, things as well as time. A doctor must work well with other people, perceive as well as visualize.
Plumbers and electrician- A plumber and an electrician will need to have good vision to thread fittings read the small gauges and interpret the blueprints. Some of the physical work as well as potential needed by the plumbers comprises of the assessment of confined spaces, application of adhesives as well as caulk, hand and arm strength, precision and manual dexterity. The plumbers and the electricians should be aware of the mechanical and technical know-how.
Food and beverage servers- The food and beverage servers should be good with providing the customer service, taking orders, serve the food and beverage, clean as well as prepare tables and process payments
Cleaning staffs – In order to become a cleaner, there is no need of a specific qualification or experience but some of the skills that can be possessed by a good clear is good interpersonal as well as communication skills along with some physical strength.
The competitive market of the ABC Company is the automobile market. The automobile market is compared with respect to their strategies for competing against one another. The main strategy which is used by the automobile industry is product development as well as efficient leadership. The automobile industry can increase their life with the help of increased mobility, safety as well as comfort. The industry also has contribution in the creation of job as well as development of skills.
An individual working in automobile market in Canada earns approximately 78,000 CAD every year. The salaries range from 35,600 CAD to 22,000 CAD. This represents the average annual salary comprising of housing, transport as well as other benefits. There is a huge difference between the salaries in different automobile career.
Following is the salary survey for a particular job in the automobile industry:
After sales manager of automotive
Technician of alignment
Auto damage adjuster
Manager of auto parts
Lead, Lag, Match
Lead the market- an employer can select to provide compensation which is higher than the rates of pay in the existing market place. This strategy of compensation might increase the supply of candidates, increase the rates of selection of the applicants who are qualified, increase morale as well as productivity, decrease the turnover of employee or discourage the efforts of unionization. However, before the implementation of this strategy, the company should identify the expected benefits, keeping in mind that a structure of this kind will increase the overall costs of labour. A strategy of lead is generally appropriate for the companies situated in a highly competitive labour market. The employers who will be adapting this strategy will require keeping a track for the determination that the anticipated benefits of this strategy are being realized.
Match the market- A common strategy of compensation for the employers is to set the pay levels relative to the ones in the existing market. Through matching the competitor’s pay rates, it is ensured by the firms that its structure of compensation stays competitive. Therefore, this allows the employers to manage the costs of labour and it also have the capability of placing the employer in a position of having a play catch-up to the compensation structure at the time of tight labour markets.
Pay Structure For The Different Job Descriptions
Lag the market- the firms that select to implement a strategy of compensation that lag the place of market might do so because they do not have to do the financial resources for paying higher rates (OTAIGO, 2019). The employers might try to reward the employees in nonmonetary ways of reducing dissatisfaction as well as turnover. this is not a common strategy because the firms that selects or are compelled to set pay rates below the prevailing market place are more susceptible to the fluctuations in the labour market , risk more difficulty in attracting as well as retaining highly qualified people and face high rates of employee dissatisfaction, turnover and poor performance.
The best strategic option for the automobile market is lead the market as it is a highly competitive labour market. This will help in increasing the candidates supply and decrease the rate of employee turnover.
The competitive market of the ABC Company is the automobile market. The automobile market is compared with respect to their strategies for competing against one another. The main strategy which is used by the automobile industry is product development and efficient leadership. A person working in automobile market in Canada earns around 78,000 CAD annually. The salaries range from 35,600 CAD to 22,000 CAD. This signifies the average annual salary comprising of housing, transport as well as other benefits. The best strategic option for the automobile market is lead the market as it is a highly competitive labour market. . However, before the implementation of this strategy, the company should identify the expected benefits, keeping in mind that a structure of this kind will increase the overall costs of labour.
The best format of appraisal which fits the compensation strategy is essay appraisal. A series of question is answered by the source about the performance of employee in the form of an essay. This can either be a trait method or a behavioural method; this depends on the way in which the essay is written by the manager. The statements might comprise strengths as well as weaknesses about the statements or the employees of the past performance (Lipuku, Sang, & Rop, 2022). This can also constitute of particular examples of past examples. The disadvantage of this method is that the writing ability of the manager can contribute to the evaluation’s effectiveness.
The incentive theory of motivation is the best fit for ABC Company. It is a behavioural theory which suggests that people are motivated by a drive of incentive as well as reinforcement. the theory also proposes that people behave in such a way they believe will lead in a reward and prevent actions which might entail punishment (Wagari, 2020). The employees have various intentions for working hard as well as staying dedicated to an organisation. One of the biggest motivations of the employees is receiving incentives for the practice of good ethic of work. Mastering the theory of incentive can help in the enhancement of the style of management, helping the members of the team to feel more valued as well as help in focusing on the professional goals of development.
Knowledge, Skills, Abilities And Other Attributes
The pay techniques in the compensation system are as follows:
Salaries and wages- In the package of compensation, this make up the singe largest element (Keynan, 2018). The experience as well as skills of the person should determine salary with an increase in the future depending on the value of the employee, level of performance as well as company’s contribution.
Bonuses- the bonus of the employee is a common way in which the employers offer the incentive of performance and are paid out yearly, generally at the end of the year, in a single lump sum (Kitur, (2021). One of the formal ways of doing this is by the profit sharing plans. But these are generally related to the success of the company versus for rewarding as well as compensating employees for their performance as well as meeting goals.
Federal/state pay needs- the state as well as federal laws are in pace for the protection of employees from the bad practices of employment which can negatively impact the pay check of the employees. There are some minimum standards set through federal labour laws which the employers are required to follow.
A pay for the system of performance links the pay of an employee to certain measure of individual and /or pay performance of the organisation, generally through a formal appraisal of performance. The performance standards as well as measure, along with the application of these standards and measures matter to the agency as well as the employees (Onwuka, & Onwuchekwa, 2018). The agency should make sure that the gaols and measures are proper, reasonable and usable, the employees should have knowledge and take part in the evaluation process of the performance and the evaluation of the performance is done by fair means as well as rigorously.
The strategies of compensation can be used for:
- Hiring as well as retaining the top performance employees.
- increase the level of satisfaction of the employees
- rewarding as well as recognising the programs for providing inspiration to peak performance
- achieving internal as well as external equity
- decreasing turnover and increasing the loyalty of company
- adapting the practice of transparent policies of pay
When the employees are paid well as well as feel contented, they will stay with the establishment (Das, 2018). Proper compensation is one of the factors why the employees stay with the employers. Reliability means that the owners of business do not need to spend more time cash or energy on recruiting new people. The retention of employees as well as low rates of separation is great for the employers who provide encouragement to a team which knows what to do. The compensation strategy of the human resource is provided an approval from the board of the organisation as the entrepreneur of the compensation strategy is always the top executive’s management of the firm (Okeke, & Ikechukwu, 2019). The strategy has a big effect on the costs of the companies and this is the main reason for the approval from the top management. The pay market is defined through the compensation strategy which is followed by the organisation.
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