Managing employee pay increases can involve a variety of immeasurable strategies that almost will certainly vary from organization to organization. Some companies believe establishing a budget to manage increased wages put the organization in control of the operating expenses and can better predict the impact on the bottom-line. While other organization subscribe to the theory of allowing department managers to create their budget for what their areas and plan pay increase by explaining how pay increase will impact the operating budget it’s how it will continue to grow the company’s goals. The company approves or revises that plan based on funds availability.
The Top Down
The top approach has factors that help companies decide whether funds are available for the organization to establish pay increases. The company first has to examine its financial health and determine if they are in a competitive position to change wages of its employees. The company then must analyze the how will increasing wages position them in their labor for similar type industries and locals companies as well to insure they are getting the most of each increase. Factors like employee turnover and cost of living can disrupt an organization budget. When making wage decisions, the company has to consider, will the current wages keep employees engaged. Will they stay at their current job or look for better paying opportunities. Employees are happier in the workplace when they believe they earn a competitive market and living wage. However, company who use this approach must decide if paying for merit or cost of living wages, benefit the company overall business strategy.
This method will not pay for performance, it will only compensate for inflation, which ...
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...performing at a high level. The disadvantage would be sometimes because managers are close to that frontline they can get blinders on which can cloud their judgment. If you always a part of the process, you cannot stand back and look at things subjectively, you only see them for how they influence your position. This process can also nurture a bias tendency that can lead to unethical decisions that could put the organization in a legal situation. So there involvement is a great opportunity to foster training and development of the management of the business. However, there still need to be some oversight on the part of the top executives to ensure fair, equitable and communicated pay increases achieve the measured result in which they are intended.
Works Cited
Milkovich, G., Newman, J., & Gerhart, B. (2014). Compensation. (11th ed.). New York: McGraw-Hill.
In offering higher wages, the company will not only promote fairness and loyalty among its employees, who are the most valuable assets in any company, but will also attract quality pool of applicants and enhance the quality of its human capital.
When employees were asked, what factors could be changed at USAA to help maintain employee motivation levels, a couple of them answered with, “higher wages” and “more money”. This response corroborates other studies regarding pay which state surveys will more likely under emphasize the importance of pay relative to other motivational factors. (Rynes, Gerhart & Minette, 2004). “Financial incentives had by far the largest effect on productivity of all interventions. For example, pay was four times more effective than interventions designed to make work more interesting.” (Rynes, 2004). One reason for this phenomenon is social desirable responding. It should be noted, that although pay may be under reported, the results indicate other factors are also important for employee
Income elasticity (EI) computed as 1.62 and 0.096 for options 1 and 2 respectively demonstrates that a one percent expansion in normal region salary may prompt to an increment of amount requested; with the expansion in amount request anticipated to rate at 1.62% and 0.096% for option 1 and 2 respectively. In that capacity, the item delineates flexibility. The last nature and result demonstrate promote that the firm may take part in augmentation value systems in circumstances where an ascent in normal pay comes about.
Deciding which pay form to use when compensating employees is extremely important to a company. Many things are taken into consideration: labor costs, the correlation between performance and pay, customer service, and the ability to attract and retain employees which is extremely important to FastCat’s need for innovation. We believe a single pay structure coincides with our single based plan for the organization. We want to keep things simple and understandable to all areas of the organization. This strategy will allow employees to understand how their performance and the performance of others relate to the success of the company through specific measures. It is also important that the strategies align with the objectives of FastCat. We beli...
When new competitors enter the market, they will have high costs of production due to the lack of economies of scale.... ... middle of paper ... ... The employees’ earnings and promotions were determined in direct proportion to their individual compensation towards the company’s success.
A company's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of manager's "best thinking at the time it is prepared." (Marshall, 2003, p.496) The budget is a method in which to reign-in discretionary spending, and will likely show variances between what costs have been anticipated and what costs are actually incurred.
In this era of high competition, traditional budgeting approaches doesn’t encourage innovation among the employees instead are focused on reduction in costs.(Player, 2003).
If part or all of the one’s salary is contingent on how well you actually perform your job, one will go the extra mile. The individual will attack his/her work with vigor and revel in the rewards. And...
The above examples of pay show that the more skills, experience employees are with the organization the more they are compensated. Organizations would benefit by utilizing the same practice’s Disney extends to their workforces. For those businesses whose primary purpose of their plan is to only meet compliance requirements could greatly benefit by developing a comprehensive benefit plan. This could help increase their return on investment. The value I believe a business may gain from Disney’s compensation plan is to appeal to competent workers, to maintain those workers, and to motivate workers to direct their energies towards achieving the goals of the organization. Companies can set up policies to conduct a market study on a regular basis to implement a real performance appraisal system and then work on retaining good employees and elimination of poor performing workers. By following Disney’s lead of in obtaining those who best fit their company’s culture and supporting the company’s Mission. To guarantee that the pay structure is externally competitive, a pay survey should be shown. The results of a survey to be valid, the market pay data must be from the relevant labor market for each benchmark job. I would advise that a survey of regional and global pay data should be collected from the company, because for example, most of the office support, HR and operations jobs will be filled by local applicants. A job analysis is the procedure of reviewing jobs in an alike business. The result of this process is a job description “that includes the job title, a summary of the job tasks, a list of the essential tasks and responsibilities, and a description of the work context “(Burke, 2008). A job description consists of the knowledge, skills and aptitudes necessary to do the job. A job evaluation is the process of adjudicating the comparative value of job within a company
Wages and Allowance – As the costs and living expenses has rised in the following market at the present economy, it needs an increase in the wages of the employees as it has more of its expenditure and less savings to the employee income and the demand for a product has risen as per its wants and needs of a supposed member of the work. So most of the employees face regular conflicts between the employee and employer.
Job costing involves usage of situations where every job is done cost differently, consumers specifications play a bigger picture in this case. Direct and indirect costs are encountered. It is believed that job costing has lots of costs accrued from the production to the consumers (REEVE, J. M., WARREN, C. S., & DUCHAC, J. E. 2012). This involves labor, running of machines, and all the individuals who are involved in the production of a product from raw to the final product, indirect costs are applied in this order. Job costing order is best showcased in a manufacturing company, let’s take coca cola company, company specialized in beverages manufacturing and distribution, usually customers have no say in the final products of this company, but as the trends for consumption of a certain flavor, according to their statistics they will conform with the demands. The special requirements, like name branding on the bottles of the beverages, customization of the containers have had a significant impact in the consumption of coca cola products (Weygandt, J. J., Kieso, D. E., & Kimmel, P. D. 2010).
Establishing compensation practice requires for specific goals to be considered such as employee retention, compensation distribution and budget analysis. Organizations must balance each of these goals and also remain competitive in order to motivate employees and maintain fairness in the compensation program.
Employees at every level have an interest in how the business is performing financially, as it impacts their remuneration.
Management spends a huge amount of time to design incentive systems and schemes to motivate their workers and to ensure they work in their best possible manner. Motivating workers by giving them decent pay helps in winning employees heart to make the work done efficiently, significantly and effectively. The most effective way to motivate people to work productively is through individual incentive compensation (Pfeffer, 1998). An attraction of getting more is a powerful incentive to people for high performance. While most people agree that money plays a major role in motivating people, in organizations there is a widespread belief that money may also have some undesirable effects on morale.
The total pay package has a direct impact on the successful recruitment, selection and the retention of staff within any organization. This pay package is critical for any business to remain competitive in today’s business world. Competitive compensation packages are vital to both large and small organizations as they encourage the retention of talented staff.