Advantages of a Fixed Salary
A fixed salary plan, also called straight salary, is one that pays employees a set amount of money based on work experience. This type of plan is not affected by performance or whether certain events occur or not. Choosing the right salary plan can lead to a successful business with hardworking employees. This section will examine the advantages of a fixed salary plan and how this plan can have a positive effect on companies and their employees.
Effect on company
A fixed salary plan makes it easier for a company’s management to plan and budget. By implementing a fixed salary, management has more control over how much is paid out to its employees (Darlington, 2012, p. 22). For example, since a fixed salary is a set amount of money, companies will know approximately how much must be subtracted from their revenue in order to pay their employees. Therefore, companies can also infer how much revenue they need to be making so that they will still be able to profit after paying their employees and other expenses.
Another advantage of a fixed salary plan is that a fixed pay is easy to administer (Darlington, 2012, p. 22). Since a fixed salary is based on an employee’s abilities and work experiences and not by hours worked, management does not need to keep track of time cards and whether certain employees stay late or leave early. “Paying a straight salary is also common when a company’s selling process is complex and involves teamwork (e.g., the mainframe computer and nuclear reactor industries)” (Basu, 1985, p. 7). Since it is difficult to keep track of the involvement of each employee in a team, company administrators prefers paying its employees a straight salary rather than spending extra time to make ...
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This project combines pay services from participating departments and agencies at the Public Service Pay Centre in Miramichi, New Brunswick. Compensation advisors in departments were given the option to move to Miramichi, but most did not. Many new staff were hired and trained for the Centre. There are some organizations like CRA and CBSA that are being serviced by their own internal departmental compensation advisors instead of those in Miramichi, but are still using the Phoenix system.
Compensation is made of a base salary (paid by the hour, work or the year; excluding overtime or bonuses), variable pay (bonuses, profit sharing/stock options which work hand and hand with the performance of the company), and benefits (to include health insurance/savings plans – 401(k), or tuition reimbursement). The traditional way of determining base pay for jobs was to compare jobs in the same industry. Now industry and market, no long work by themselves, the current thinking is more person-based that considers knowledge, skills, and competencies of the work. This, however, is best suited for high-performing environments that remain flexible in their deployment of human capital.
Compensation will play a role in The Fit Stop because of its long hours, need for some skilled workers, and because all of the employees are full-time. Determine the Compensation Mix: The Fit Stop employs three different levels of employees: manager, physiotherapist/kinesiologist, and salespeople. Because each of these different positions requires a different level of education and experience, it is assumed that these positions will also come with different compensation options. Base pay will differ between the three levels of employees, beginning with the managers receiving the highest level of base pay (due to their higher level of education/experience) and salespeople receiving the lowest level of base pay. The physiotherapist and the kinesiologist will receive base pay somewhere in between.
The company Steel Co, which has been established for around 30 years, has been in a steady decline during the current recession and although a Divisional Director has been employed by the owner the fortunes of the company have not improved. The staff is unhappy, unproductive and unimpressed by the Human Resource system that currently exists in the company. The pay structure that currently exists within the organisation has been much debated among employees who feel it is unsatisfactory. The Business Adviser will research Performance and Reward management tools in order to help the company develop a more suitable Performance and Reward system to use. A variety of sources will be used in order to evaluate the system and tools against other organisational frameworks. The pay structure within the company will also be looked at in order to identify any possible changes that could be made.
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It is hard to measure the productivity of teachers and, therefore, it is important to use a single salary schedule in their compensation. In other professions such as engineers,
Frydman, C., & Saks, R. E. (2010). Executive Compensation: A New View from a Long-Term Perspective, 1936-2005. Review Of Financial Studies, 23(5), 2099-2138.
We can see that piecework is a direct indicator of the employees output. In addition, the year end bonus is linked with the profit the company earns. The guaranteed employment provides employees the base line for their life, so they don’t have to be worried about getting fired or searching for other jobs, which makes them more concentrated on their jobs. From the combination of these three components, employees can have confidence to work and to understand that their performance will be measured properly.
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Schneider, B. 1991, "Service quality and profits: can you have your cake and eat it too?", Human Resource Planning, no.14, pp.151-157.
Remuneration management is defined as the sum received for an employment or service delivered, this includes the money received on a monthly basis as well as benefits given as rewards (investopedia,para.1 ). Individualism need to be taken into account when implementing these remuneration structures or reward schemes, equal pay plays a role in balancing earnings among the diverse workforce (Shen, Chanda, D’Neetto and Monga,2009,p.241). The Woolworth’s Holdings uphold remuneration policies which have the purpose of making sure to attract and hold on to the best talent, that they are congruent with the strategies of the company and are the determinants of performance during the short and long phases. The policy considers the board members and the employees. This policy manages employees of the company by giving...
Henemen, Robert L. Linking Pay Increase to Performance Ratings. Addison-Wesley Publishing Company, Inc. Reading, Massachusetts 1992.
The organization is able to manage a high coverage of risks at relative low costs owing to the availability of highly skilled personnel in the company’s team of employees. This benefit also brings about another advantage of easing the financial burden of the organization (Johnson, 2016). Besides, effective employee benefit system offered by the organization could improve the general productivity. This benefit is attributed to the fact that employees tent to be more effective when they are given assurance of job security. In addition, workers become more productive when they and their families are given the desired security by the employer. The other benefit to the organization if it employs an effective compensation and benefits system entail benefits from premiums (Wayne, Shore, M., Bommer, & Tetrick, 2002). These premiums are typically tax deductibles as corporate expense. As such, a company that has an effective compensation and benefits system is likely save extra money for other
Meyer, H. H. (1975). The Pay-for-Performance Dilemma. Organizational Dynamics, 3, 39-50. Print. 8 Feb. 2014.
To accomplish these objectives, the Holland Enterprise will provide a compensation program that establishes and maintains competitive salary levels within the mark...