Establishing a pay structure is an essential function of any business. Pay structures represent the framework for recognizing differences in employee contributions. It is very important that a firm compensates its employees according to their credentials, knowledge and job performance. Two popular pay structures include person-focused pay and job-based pay. Person-focused pay is based on an employee’s demonstrated mastery of a series of competencies that make them more valuable to the business. On the other hand, job-based pay compensates employees for the job they perform while also considering seniority, merit and incentive pay.
The company whose pay structure I chose to research was Amazon. After researching Amazon by reviewing their mission statement and annual report submitted to the SEC, I have come to the conclusion that a person-focused pay structure would be more beneficial for the company. Amazon is one of the big five companies in the United States information technology industry. It focuses primarily on e-commerce but also incorporates digital streaming, artificial intelligence and cloud computing. Their mission is to be the most customer-centric company by improving the customer experiencing through the internet and technology.
I believe that Amazon would benefit from a person-focused pay structure because it would provide their employees with job enrichment and security which in turn creates a more intrinsically motivating work environment and greater employee satisfaction. Furthermore, a person-focused pay structure would be preferable because it leads to enhanced job performance, reduced staffing and greater flexibility. These are all essential characteristics for Amazon because they employ a large number of high-level employees that must keep educating themselves as technology continues to evolve. By implementing a person-focused pay structure, Amazon is supporting their employees continued growth and better retaining employees who may be motivated to leave the company.
Altogether, I believe that Amazon would greatly benefit from a person-based pay structure because it would empower their employees to continuously improve their skills, knowledge and competencies. Doing so will play a crucial role in achieving Amazon’s mission statement.
