Compensation Programs - Key Goals, Impact, Pay Mix, Job Evaluation, HR Manager Salary, Pay for Performance

This article discusses the different attributes of compensation programs, including key goals, impact, pay mix, job evaluation, HR manager salary, and pay for performance. It also covers the impact of inflation on pay rates and the best method for evaluating the effectiveness of a compensation strategy.

Running head: COMPENSATION PROGRAMS
Compensation Programs
Name of the Student
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Author Note

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The modern day organizations are observed to face the issues of employee
demotivation in a significant manner due to the considerable amount of work pressure that
the employees are facing. Under such condition the proper rewarding policy has great
significance for the organizations. The paper is focused in specifying the different attributes
of the compensation programs.
1.1 Key Goals of the Compensation Strategy:
The modern organizations are observed to create the compensation strategy with
precise focus on 5 different points which are mentioned below:
Talent Acquisitions:
The organizations are observed to structure their compensation strategy in such a
manner that they be able to attract the top quality individuals or talents for their organization.
This helps the organizations to process their business operation through the best quality
employees.
Retention and Rewarding Personnel:
The second motive for the compensation strategy is the retention of the employees for
the service for a longer period of time. One of the primary function of the compensation
strategy is the rewarding for the recognition of the good work that an employee conducts.
This motivates the employees to increase their quality and the tenure with the organization
(Adeoye & Fields, 2014).
Maximization of the Return on Investment:
The organization’s prime objective for an effective compensation strategy is the
higher rates of return on Investment. The organizations are in need to make sure that they be
able to come up with such a compensation strategy which will trigger the employees to

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increase their workload and at the same time it will enable them to provide the utmost quality
in their operations.
1.2 Impact of Compensation System:
Several organizational surveys are able to confirm that the modern organizations are
subjected to significant amount of work pressure and it is also observed that the employees
under such situations are getting dissatisfied and frustrated with their jobs. The introduction
of the effective rewarding policy into the compensation system is significant in this case as
the employees are able to get motivated (Terera & Ngirande, 2014). The rewarding policy
includes both sets of rewards that is the intrinsic and extrinsic so that the employee’s
concerns of the various non-financial aspects is taken care along with the financial aspects.
On the other hand, a not so effective rewarding policy which is not able to offer much
financially and non-financially to the employees along with the improper and inadequate
recognition of the employees will be instrumental in demotivating the employees.
Maslow’s Hierarchy of Needs and Intrinsic and Extrinsic Rewards:
Levels Intrinsic Extrinsic
Physiological Needs Office Quarters Accommodation Rents
Safety Needs Quarterly Health Check ups Performance Bonus
(Einstein, Addams &
Roosevelt, 2016)
Social Belonging Outdoor Tours Tour Vouchers
Esteem Renowned Club
Memberships
Luxurious Cars
Self-Actualization Promotion to higher levels Increment in Salary

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1.3 Pay Mix:
Pay mix is a ratio of the On-Target Earnings considered as Base Salary to the On-
Target Earnings considered as target incentives (Merriman et al., 2016).
Internal Factors that affect the pay mix:
The worth of a particular job.
The relative worth of an employee.
The capability of payments from the part of the employers.
Job Evaluation.
External Factors:
The situation of the Labour Market.
The wage rates of a concerned area.
The cost of the living with a precise focus on the inflation.
The ability of collective bargaining.
1.3.1 Impact of Inflation on the increment of the pay rates:
The impact of inflation is significant in increasing the pay rates. Each and every
society is observed to face the effect of inflation at a point of time when the market behaves
abnormally. Under such condition the way of living for the employees gets affected and their
purchasing power gets decreased. In such cases, inflation is able to increase the pay rates
upward periodically.

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1.3.2 Method for evaluation of the achievement of the compensation strategy:
The best method to evaluate whether the compensation strategy is working well for
the employees or not is the conduction of the survey among the employees of the
organizations. This will make sure that the organizations have the idea of the level of
satisfaction that the compensation system is able to generate. Along with that, the analysis of
the financial statements of the organization will be significant from the part of the
organization in order to assess the excellence of the compensation strategy.
1.4 Job Evaluation:
It is a process for the determination of the value or worth of a job compared to the
other jobs of an organization (Thierry & de Jong, 2013).
Differences:
Methods Advantages Disadvantages
Job Ranking System It is the simplest format
among all the available
methods and is significantly
suitable for the small scale
businesses
Many critics of the system
considers that the
development of the rankings
is difficult in large and
complex organizational
context.
Job Classification System The mentioned system is
significantly easy for the
employees to understand.
The method is incapable in
stating the smaller
differences among the
various different grades and

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roles.
Point System The identification of the key
jobs is notably easy in this
method.
The mental demands of a
job has great detrimental
impact in this method.
1.5
1.5.1 Human Resource Managers’ Salary:
The modern organizations are facing the significant need of following the business
operation in a scientific way. In order to do so, the organizations are able to experience the
requirement of an efficient human resource manager. The modern day organizations are
facing a sharp rise in the salaries of the human resource managers due to the significant
amount of need of them in the market. According to Aswathappa (2013), the current market
value of the human resource managers is 73000 Canadian dollars. Chelladurai & Kerwin
(2017) stated that a human resource manager in Canada gets 71142 Canadian dollars.
Albrecht et al. (2015), is able to confirm that the human resource managers in the Canada is
get 71000-74000 Canadian dollars as compensation on an average.
Levels Price (In Canadian Dollars)
Entry-Level 56940
Mid-Level 72270
Experienced 91980
1.5.2 Pay for Performances:

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It is a method for the employee payment that significantly connects the compensation
along with the quality of the work (Štangl-Šušnjar & Berber, 2014).
Incentive Rewards:
Joining Bonus:
The modern business market is significantly facing the need of the efficient human
resource managers and under such situation, the joining bonus for the managers will be
significant to attract. The managers get a onetime compensation for choosing the company
for his service in these cases.
Loyalty Bonus:
The competitive business market is able to create such an atmosphere where the
retention of the employees is significantly difficult. In order to resolve this issue, the
introduction of the loyalty bonus will be a great proposal. This will make sure that the
managers get something as recognition for their prolonged association with the concerned
organization.

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References:
Adeoye, A. O., & Fields, Z. (2014). Compensation management and employee job
satisfaction: A case of Nigeria. Journal of Social Sciences, 41(3), 345-352.
Albrecht, S. L., Bakker, A. B., Gruman, J. A., Macey, W. H., & Saks, A. M. (2015).
Employee engagement, human resource management practices and competitive
advantage: An integrated approach. Journal of Organizational Effectiveness: People
and Performance, 2(1), 7-35.
Aswathappa, K. E. M. A. L. (2013). Human resource management: Text and cases. Tata
McGraw-Hill Education.
Chelladurai, P., & Kerwin, S. (2017). Human resource management in sport and recreation.
Human Kinetics.
Einstein, A., Addams, J., & Roosevelt, E. (2016). Maslow's hierarchy of needs.
Merriman, K. K., Turner, L. A., Galizzi, M., & HaynesBaratz, M. (2016). Pay mix policies as
(dis) incentives in motivated job choice decisions. Translational Issues in
Psychological Science, 2(2), 184.
Štangl-Šušnjar, G., & Berber, N. (2014). Incentive pay and performances of organizations: A
research on the basis of the Cranet data in Europe. Anali Ekonomskog fakulteta u
Subotici, (32), 73-88.
Terera, S. R., & Ngirande, H. (2014). The impact of rewards on job satisfaction and
employee retention. Mediterranean Journal of Social Sciences, 5(1), 481.
Thierry, H., & de Jong, J. R. (2013). Job evaluation. In A Handbook of Work and
Organizational Psychology (pp. 175-194). Psychology Press.

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