Executive Compensation and Corporate Governance

This assignment delves into the complex world of executive compensation and its impact on corporate governance. Students are tasked with analyzing various academic articles exploring the link between compensation structures, corporate risk-taking behavior, and firm performance. The analysis should incorporate real-world examples and demonstrate a critical understanding of the ethical and economic considerations surrounding executive pay.

Running head: HUMAN RESOURCE MANAGEMENT
Human Resource Management
Name of the Student
Name of the University
Author note

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1. Introduction
The report helps in analyzing the compensation programs of the Royal Bank of
Canada along with proper determination of the rate of pay of new hires with the existing
staffs in the company in order to properly ensure internal equity. The different process that is
used by the company has to be analyzed as well as this will help in ensuring that the
compensation is aligned with the external equity.
The main aim of the report is to understand the different benefits that are received by
the employees for working with the respective organization. The report helps in
understanding the effectiveness of the compensation program in the company. The main
purpose of the report is to understand the different kinds of benefits that are received from the
organization.
The structure will be based on the analysis of the rate of new hires in the company
along with understanding the different benefits that is received by the employees or working
with the respective organization. Proper analysis has to be done on the analysis of the
compensation program with the help of Likert scale and proper recommendations has to be
provided to the company in order to improve the compensation program.
2. Background of Royal Bank of Canada
The Royal Bank of Canada is Canadian multinational company that is related to
financial services and this is the second largest bank in Canada. The respective bank is
serving more than 16 million clients as well as 80,000 employees worldwide as well. The
corporate headquarter of the company is situated in Quebec and the bank was founded in the
year 1864 in Nova Scotia ("Personal and Business Banking Services - RBC Royal Bank",
2017).

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The function of the Royal Bank of Canada is banking with the commercial and
personal operations and it has serves more than sixteen million clients through the network of
more than 1200 branches. There are more than 80,000 employees who are working the
respective bank and it is providing cross border services to the Canadian travelers and expats.
The employees who are working with Royal Bank of Canada are highly educated and they
are having proper knowledge about the financial services that has to be performed by the
organization. The location of the Royal Bank of Canada is situated at 700 Place d'Youville,
Ville de Québec, Canada.
3. Evaluation of rate of pay for new hires and existing employees
Salary range is the pay range that is decided by the different employers in Royal Bank
of Canada with the performance of a particular function or job. The range of salary is
determined with the help of pay rates of market that depends on the knowledge and skills of
the employees in the organization. There are different companies wherein the compensation
strategy is based on the level of experience of the employees as well as there are different
differentiations in the salary that is provided to the employees who are working in the
organization for many years (Baxter et al., 2014).
In Royal Bank of Canada, the evaluation of the pay rate is dependent on several
internal equity factors:
Proper fairness perception wherein the culture of the organization is an essential
factor and this will help in proper development and maintenance of the fairness
culture as well (Feldman, 2016). When the different employees are getting equally
paid for different kinds of employees in the organization, it means that the
management is fair to the employees. In Royal Bank of Canada, there is proper
perception of fairness as the employees respect the higher officials as they are fair to

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the employees and the employees listen to the guidance as this will help in proper
achievement of the tasks as well (Pepper & Gore, 2015).
Proper reduction in exposure to discrimination is wherein the higher officials of the
respective bank will provide proper emphasis on the internal equity. This will offer
proper protection against the lawsuits related to discrimination (Belghitar & Clark,
2014). The higher officials of the bank has to pay equally to the different employees
who are performing same kind of tasks in the company as this will reduce the risk of
discrimination among the employees. With the help of proper internal equity, this will
help in reducing the risk of salary discrimination among the employees (Kaspin,
Gorman & Miller, 2013)
Consistent and proper standards is properly maintained by the respective bank as
proper consistent standards are met by the higher officials of the company in
providing salary to the employees (Coles, Daniel & Naveen, 2013). While conducting
a proper analysis of the job, proper abilities as well as responsibilities are required in
understanding the different positions of the employees in the workplace. This will
make the entire task much easier in nature for paying them fairly (Bodnar et al.,
2016). This is helping in motivating the employees in the workplace and this helps in
improving the performance.
4. Processes used by company in ensuring compensation is aligned to marketplace
Royal Bank of Canada has to properly keep up with the competition in the
marketplace as this will help them in motivating the employees and making them
work for the respective company (Gormley, Matsa & Milbourn, 2013). This is done
because the employees may resign and work for other companies where the salary is
higher than the previous one and this will help them in performing well (Rahmana,
2016).

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Royal Bank of Canada has to help with the negotiation as when the employees are
working for a particular time, it is essential for the company to properly understand
the work performed by individuals and ask for raise in salary as well. Royal Bank of
Canada has to understand the pay structure of other companies in the competitive
market as this will help in retaining the employees in the workplace (Osibanjoet al.,
2014).
Royal Bank of Canada has to perform competitive pricing as this will help in keeping
the salary in line with the competitors in the competitive market. The wages that are
paid to the employees by the company is ultimately priced into different products as
well as services. Royal Bank of Canada has to stand in competition with other
companies as this will help them in competiting properly in the market (Pathak,
Hoskisson & Johnson, 2014)
Lastly, Royal Bank of Canada has to conduct proper researching as this will help
them in staying on the top of the market. Proper market research has to be conducted
by the company as this will help in figuring out the position of other companies.
Proper conducting of the research in the market will help Royal Bank of Canada stay
in the top of the list (Liao & Hsu, 2013).
5. Benefits received by employees in Royal Bank of Canada
There are different kinds of benefits that are received by the employees in the
respective bank. The Royal Bank of Canada is providing different benefits that include:
Elder and child care benefits is provided in the respective bank as this is one of the
essential benefits that are required by the employees who are working in the
organizations (Kuratko, Covin & Hornsby, 2014)

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Compensation time is available in Royal Bank of Canada as the employees who work
for extra hours in the company are paid extra benefits and payments or there are other
benefits such as take up to an hour off as this will motivate the employees.
Family and friendly benefits are provided to the employees of the respective bank
wherein the employees are provided with a paid leave in order to visit the family
when he/she is staying away from family members and creating their own schedules
for work as well (Larcker, McCall & Ormazabal, 2015).
Flex time is available in Royal Bank of Canada as well as this will help in providing
the employees flexi timing and this will provide the employees proper motivation for
performing the job and delivering it on time as well (Gupta & Shaw, 2014).
Health insurance is the standard benefit that is provided to the employees as this
provides option that will act as benefit to the employees of the organization.
Personal and parental leave is followed by Royal Bank of Canada wherein the
employees are provided with three months of paid leave for family or personal issues
or illness and this will help in motivating the employees to perform better in the
organization as well.
6. Overall effectiveness of compensation program
Questions Completely
Ineffective
(1)
Effective
(2)
Neutral (3) Perfect (4) Absolutely
perfect (5)
Overall effectiveness in compensation program
You are
satisfied and
happy with
the

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compensation
program

You are
happy
regarding the
associate
works

I receive the
correct
amount of
salary for the
work
performed by
me

I feel that the
benefits
provided to
me is not up
to the mark

I feel I require
proper gain in
the salary as
per my
performance

I feel more
training
programs has


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to be
organized in
order to make
the employees
effective in
nature
Table 1: Overall effectiveness of compensation program in Royal Bank of Canada
(Source: Created by author)
From the table, it can be analyzed that proper effectiveness is required in the
compensation programs that are conducted by the Royal Bank of Canada as this will help in
analyzing the different kind of issues that are faced by the individuals in the workplace. The
salary that is being provided to the employees in the workplace has to be revised as this will
help the respective company in standing out in the crowd and this will help in being more
effective in nature as well.
The other companies in the competitive market provide other benefits in the company
that is not provided to the employees in the Royal Bank of Canada and proper strategies has
to be implemented as this will the company to motivate the employees. The respective bank
can offer more than a paycheck to the employees as this will help in improving the strategy of
compensation. There should be proper activities that will help in promotion of employees as
this will help in motivating employees.
7. Recommendations
Therefore, it can be recommended that Royal Bank of Canada needs to implement
proper strategies relating to compensation of the employees. The respective company needs
to provide promotions that are related to the performance of the employees as this will help in

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providing motivation to the employees and this will help in motivating the employees. Royal
Bank of Canada has to properly develop proper range of salary for different employees and
the employees who are performing equally has to be paid equally as well as this will help in
providing motivation to the employees in the workplace. Proper performance management
system has to be incorporated by Royal Bank of Canada as this will help them in providing
proper competition to other companies and this will help them in performing better as well.

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References
Baxter, S., Sanderson, K., Venn, A. J., Blizzard, C. L., & Palmer, A. J. (2014). The
relationship between return on investment and quality of study methodology in
workplace health promotion programs. American Journal of Health Promotion, 28(6),
347-363.
Belghitar, Y., & Clark, E. (2014). CONVEXITY, MAGNIFICATION, AND
TRANSLATION: THE EFFECT OF MANAGERIAL OPTION‐BASED
COMPENSATION ON CORPORATE CASH HOLDINGS. Journal of Financial
Research, 37(2), 191-210.
Bodnar, G. M., Giambona, E., Graham, J. R., & Harvey, C. R. (2016). A view inside
corporate risk management.
Coles, J. L., Daniel, N. D., & Naveen, L. (2013). Calculation of compensation incentives and
firm-related wealth using Execucomp: Data, program, and explanation.
Feldman, E. R. (2016). Managerial compensation and corporate spinoffs. Strategic
Management Journal, 37(10), 2011-2030.
Gormley, T. A., Matsa, D. A., & Milbourn, T. (2013). CEO compensation and corporate risk:
Evidence from a natural experiment. Journal of Accounting and Economics, 56(2),
79-101.
Gupta, N., & Shaw, J. D. (2014). Employee compensation: The neglected area of HRM
research. Human Resource Management Review, 24(1), 1-4.

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Kaspin, L. C., Gorman, K. M., & Miller, R. M. (2013). Systematic review of employer-
sponsored wellness strategies and their economic and health-related
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Kuratko, D. F., Covin, J. G., & Hornsby, J. S. (2014). Why implementing corporate
innovation is so difficult. Business Horizons, 57(5), 647-655.
Larcker, D. F., McCall, A. L., & Ormazabal, G. (2015). Outsourcing shareholder voting to
proxy advisory firms. The Journal of Law and Economics, 58(1), 173-204.
Liao, C. H., & Hsu, A. W. H. (2013). Common membership and effective corporate
governance: Evidence from audit and compensation committees. Corporate
Governance: An International Review, 21(1), 79-92.
Osibanjo, A. O., Adeniji, A. A., Falola, H. O., & Heirsmac, P. T. (2014). Compensation
packages: a strategic tool for employees' performance and retention. Leonardo
Journal of Sciences, (25), 65-84.
Pathak, S., Hoskisson, R. E., & Johnson, R. A. (2014). Settling up in CEO compensation: The
impact of divestiture intensity and contextual factors in refocusing firms. Strategic
Management Journal, 35(8), 1124-1143.
Pepper, A., & Gore, J. (2015). Behavioral agency theory: New foundations for theorizing
about executive compensation. Journal of management, 41(4), 1045-1068.
Personal and Business Banking Services - RBC Royal Bank. (2017). Rbcroyalbank.com.
Retrieved 20 November 2017, from http://www.rbcroyalbank.com/