Week 4 – Compensation Systems
When considering the complexity of developing a compensation systems that is both internally consistent and market competitive it it is very complex. However, it can be done with strategic planning to be implemented correctly and efficiently.
A challenge of this can come from the internal consistent compensation system which “defines the relative values of each job among all jobs within a company” (Martocchio, 2017). The challenge with this comes from having a clear job structure that is based on complexity, responsibilities, and qualifications of jobs in which they are paid higher than position with less responsibilities and qualifications. Therefore, it can be difficult to match and or remain competitive with other competitors because it means raising wages for positions to retain and attract employees in which organizations may not have the capacity to do so.
Another challenge can be when creating a market – competitive pay system that is also internally consistent it requires extensive time and effort. Reasoning being creating a competitive pay system is based on four comprehensive activities which include conducting a strategic analysis, assessing competitors pay practices through compensation surveys, integrating internal job structure with external market, pay rate, and determining compensation policies (Martocchio, 2017). These are not activities that can be completed quickly and it does not mean implementation will run smoothly. Evaluation, analysis, and adjustments will need to be made to ensure that implementation is correct and measures align with the organizations goals and values to be able to best attract and retain employees in a competitive job market.
References:
Martocchio, J. J. (2017). Strategic compensation: a human resource management approach. Pearson.
Swift, M. (2021). Introduction to Compensation [Lecture recording]. Canvas@Oregon State University. http://canvas.oregonstate.edu/courses/1842591/pages/week-4-learning-materials
