Summarizes different ways that company employees can be compensated and rewarded fairly.
This paper describes various ways through which employees can be compensated suitably. The paper first addresses the market-driven pay system, and looks at the positive and negative employee responses to this system. The paper considers the benefits and disadvantages of this system for the organization and also looks at other approaches to establishing base pay, that include incentive pay and benefits. The paper examines the types of benefits there are and what the criteria should be for choosing these benefits.
“Market-driven pay system has all the characteristics of a traditional base pay system plus more, going through all the steps such as job analysis, market survey, job evaluation and creation of pay ranges. Structuring this pay system begins with the personnel department recording the responsibilities and functions associated with each job in the firm. This is followed by each employee giving his own version regarding his job responsibilities and functions usually by filling out a preset job questionnaire. Both of the versions are used to finally establish job descriptions. This is followed by grouping the jobs in a hierarchy according to a job’s significance to the firm and assigning appropriate grades to them based on the job descriptions. A market survey is conducted in the next step in order to collect pay data of other organizations in similar business and with similar demographics. This step is undertaken by contacting other employers and various independent human resource consulting groups.”