Analysis of Compensation Management at United Parcel Services

This report analyzes the compensation management practices at United Parcel Services (UPS), a global shipping company. It begins with an introduction to compensation management, highlighting its importance in attracting and retaining talent through various reward systems, including monetary and non-monetary benefits. The report then explores the benefits of effective compensation management, such as increased employee motivation, improved job standards, and enhanced employee skills. It also discusses different types of wage structures, including narrow-graded, career family, job family, broad band, pay spine, and spot rates. The current compensation system at UPS is examined, detailing benefits like medical insurance, allowances, overtime wages, and bonuses. The report further delves into the pay structures used by UPS, such as career family and job family structures, and how job analysis and evaluation are conducted to determine wage structures. Finally, the report concludes by emphasizing the significance of employee rewards in fostering motivation and boosting productivity, ultimately leading to increased capital input for the organization. References are included to support the analysis.

Running Head: COMPENSATION MANAGEMENT
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Compensation management
Student’s Name
Course
University
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Introduction
United Parcel services UPS
United parcel services is a shipping organization that delivers worldwide, and it is considered as the largest
in the whole world. It was founded in the year 1907, and since then it has developed to be the largest and
most popular shipping company across our nations, and its headquarters are based at Atlanta, Georgia.
Compensation system
Compensation management is a way of retaining and attracting talented employees in an organization. This
is done by rewarding employees to compensate for the effort they are putting in their work. Compensation
management involves mostly the need to maximize human capital return. Apart from the basic salary that is
paid the organization should focus more on rewarding the employees with non-monetary rewards. The
benefits of this compensation management in an organization include;
a) When an employee is rewarded for doing good work they get satisfied. This helps them to get
motivated work harder and get more rewards, and this makes his/her more productive which
contributes a lot to the last capital of the organization (Clot, Andriamahefazafy, Grolleau,
Ibanez & Méral, 2015).
b) During evaluation of creating new job in an organization compensation management is a very
important aspect because it helps set up standards for the organization that are achievable and
applicable as far as the compensation management is concerned.
c) When the compensation system is followed, and employees have in mind that when a particular
goal is met he/she will be rewarded, they work hard to achieve them. The professional skills of
the employees improve and grow substantially.
d) This helps the organization retain its most talented employees, and it also assists in attracting
new employees to work in the organization since the organization reputation is good and also

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due to the rapid growth of the organization economically (Ismail, Anuar, Haron & Kawangit,
2015).
Types of wages structure that exist
Wages is the payment made to someone who has finished a task that had been assigned to them and paid
after an hour, week or month. While for a wage structure is the level of payment for jobs and their ranges of
payment depending on the level of the job (Yen & Huang, 2017).
These wages structures include;
a) Narrow-graded structures are known as pay structure that is
multigrade
b) Career family wages structures-Career family job are jobs that
belong to the same range size. Generally, it is divided into 6 to 8
levels depending on the skills and knowledge required to perform
this duty. The pay ranges are the same to employees on this job
level.
c) Job family wages structure-in this each job family has its pay in
order to show the unique character of the duties.
d) Broad Band wages structure-in this structure jobs to not fall under
a specific duty but it is more of job movement and enhances the
development of skills.
e) Pay spine-this type of payment can be used in determining the pay
ranges that help to classify jobs paid from the highest to the
lowest.
f) Spot rates-a sport rate pay is the charges paid during a foreign

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currency transaction.
Current compensation system in UPS
In united parcel service, they compensate their employees in order to improve the organization capital
outcome and workers productivity. United parcel service offers different types of compensation which
includes;
a) Benefits like
 medical insurance
 vacations
 leaves
 team building retreats
b) allowances like
 housing
 transport
c) Overtime wages-this is payment paid to an employee for the hours he/she has worked,
and they are not working hours.
d) Bonuses-employees who work hard and achieve the organization goals are given
e) bonuses to reward them (Taufek, Zulkifle & Sharif, 2016).
Current pay structures used in UPS
Career family pay structure-it is used in the united parcel services to pay employees within the same range

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as the accountants, marketing agent, IT experts.
Family job pay structure-while employees on the family job level are paid differently since they have
different duty characteristics an examples of this is a manager and a supervisor.
How job analysis and job evaluation are done and help decide wages structure in UPS
a) Job analysis
Job analysis is defined as the study that helps to identify requirement of a job like the qualification of the
works, the materials, equipment, and machinery to be used, it also helps to analysis the responsibilities,
duties and works environment for employees. Observation, questionnaires, and interviews are some of the
techniques used in job analysis (Gunderson, Lee & Wang, 2016).
b) Job evaluation
When an organization creates a new job opportunity, they evaluate the importance and the value of the
position in the organization; this is known as a job evaluation. In an organization job are classified into
categories and they are ranked from the highest to the lowest, which helps to categories pay grades(Clot,
Andriamahefazafy,Grolleau,Ibanez & Méral,2015). Factor comparison, point method, ranking, and
classification are techniques used in job evaluation
A job evaluation helps in knowing the most productive and hardworking employees in an organization and
help increase the overall capital input(Kahya,2018). Also, the organization can determine their wage
structure and reduce the competition since they have identified from where to rank. Job analysis helps the

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organization to have a workforce plan that enables the employees to work toward achieving the goals and
also the organization can identify the most hardworking employee.
Pay designs and pay levels used in UPS
After a job evaluation and job analysis activities and duties are ranked depending on the skill and
knowledge. The different ranks and classifications run from the highest to the lowest, and this helps in
wages structure. Career family jobs have same pay since they are at the same level an example of a career
family is administration, IT and marketing while for job families have different pay since they have different
duties, for example, a manager and supervisor. Payments design is from the highest to the lowest employee
and for compensation system they reward employees for from the hardest working employee
Conclusion
Rewarding of employees in an organization is essential since its help in motivating employees and helps
increase their productivity leading to a high capital input in the organization.
Reference
Clot, S., Andriamahefazafy, F., Grolleau, G., Ibanez, L., & Méral, P. (2015). Compensation and Rewards for
Environmental Services (CRES) and efficient design of contracts in developing countries.

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Behavioral insights from a natural field experiment. Ecological Economics, 113, 85-96.
Clot, S., Andriamahefazafy, F., Grolleau, G., Ibanez, L., & Méral, P. (2015. The theory of wage
determination. Springer.
Gunderson, M., Lee, B. Y., & Wang, H. (2016). Union pay premium in China: an individual-level
analysis. International Journal of Manpower, 37(4), 606-627.
Ismail, A., Anuar, A., Haron, M. S., & Kawangit, R. M. (2015). Reward administration system was
enhancing organizational commitment: An Islamic viewpoint. International Letters of Social
and Humanistic Sciences, 49, 155-167.
Kahya, E. (2018). A wage model consisted of job evaluation employee characteristics and job performance
— Pamukkale University Journal of Engineering Sciences, 24(4).
Landau, K., & Rohmert, W. (Eds.). (2017). Recent developments in job analysis (Vol. 24). Taylor & Francis.
Taufek, F. H. B. M., Zulkifle, Z. B., & Sharif, M. Z. B. M. (2016). Sustainability in Employment: Reward
System and Work Engagement. Procedia Economics and Finance, 35, 699-704.
Yen, C. D., & Huang, T. C. (2017). The pay structure for task performance in the hospitality industry: The
role of pay satisfaction. GSTF Journal on Business Review (GBR), 2(2).