Reference no: EM132265161

Thread 1

The pay model is defined as a framework of policies that make up the compensation system of a business. The over all goal of this model is to ensure that staff is treated with fairness and equality without compromising the financial viability of a company. The model not only provides a structure for existing systems, but a template for designing new systems (Milkovich, et al., 2014)

The four policies that are address in the pay model are: internal alignment, external competitiveness, employee contributions, and management. The purpose of these policy issues is to ensure that compensation is disbursed efficiently, fairly, in compliance with all federal state and company guidelines, and handled in an ethical manor (Milkovich, et al. 2014).

Internal alignment analyzes the compensation packages with in an organization. Internal alignment helps to either motivate or discourage an employee to remain with a company or seek employment elsewhere. External competitiveness studies the comparison of a compensation package with that of similar positions outside of a company. Employee contributions deals with how employees are paid. Questions that are wrestled with are if pay should be based on seniority or performance. Finally, management ensure that all of the compensation is disbursed effectively and appropriately based on the human resource policies that have been formulated (Milkovich, et al. 2014).

Effective compensation management is key. If the compensation is not disbursed ethically or fairly, this may be a cause for high turnover within the organization. Choosing the best method of compensation can be a challenge. Studies indicate that only 32% of employers have found that their pay for performance strategy is effective. Still only 20% believed that this strategy drives their employees to higher levels (Miller, 2016). The other prefer to use market values available through the local Department of Labor & Industry to provide COLA increases (Bolden-Barrett, 2019).

Another part of the pay model to highlight is the role of employee contributions. Tying into the management portion, determining how to quantify the value an employee adds can be sensitive. Using a method that provides the same reward for an under achieving employee as an over achiever can be bad for moral.

Thread 2

There are four policy issues in the pay model that a company must review and manage consistently; internal alignment, external competitiveness, employee contributions and management of pay system.

Internal alignment of wages is an important factor for keeping pay scales fair and consistent within the current workforce as well as new hires. Not all jobs require the same experience or skill set. Setting a standard range of wages is important to assist with paying employees fairly and maintaining a strong work force.

As we know many times employees will share their pay rate with their coworkers. If both are doing the same job, but one makes more than the other, this can cause conflict. It may even cause a strong contributor to leave the company leaving a void of a much-needed skill. Employees will have more respect for a company who pays wages more consistently.

Internal alignment of wages is one of the important factors needed to keep employees satisfied and engaged. "Although many think this is a difficult question to handle, especially given how secretive most people are about how much they are paid, it is surprisingly simple to find specific information about wages in very specific occupations in very specific areas (Hallock 2012)".

External competitiveness is another issue that an employer must consider when trying to retain employees and hiring new ones. If a company is not competitive with their pay, then getting those highly skilled employees is going to be very difficult. Even if an employer offers great benefits, many times the employee is more interested in what is deposited into their bank account at the end of the work week, not what cannot be physically seen.

Employee contributions rely greatly on how the employer scales their wages. If an employee believes they are paid a good wage, they are going to give 110%. But if an employee does not feel adequately compensated, they are only going to work at a pace to produce work-based feelings of how they negatively they are compensated.

There are a number of factors that make a company successful and one is employee contributions. If the employee is not productive, has poor attendance and is only interested in advancing themselves, then the company is not going to be successful. This causes a loss of profitability for both the employee and the company.

Management of pay system can be an issue if an employer does not consistently manage this process to be competitive within the business market. Being competitive with external companies is one of the best ways to gain that strong employee who has a special skill set in high demand.

A good example is the furniture industry where I work. One of the dying skills is sewing. There just is not that next generation of sewers coming into the workforce. It is more imperative that I be competitive with pay or I am not going to succeed getting that great employee with the excellent skill needed to ensure the future success of the company.

The purposes of the objectives of the pay model serve both the employee and the employer. If you pay a strong, hard working employee who adds great value to the company good wages deserved, you may have an employee for life. If the pay model is not managed well, then the company puts themselves in a difficult position of failing to be competitive within their industry therefore possibly have a less than stellar workforce. It takes all parties to be successful. We all depend on each other.

A man or woman of God should always do their best when earning a wage. Always work with diligence, honesty and integrity. You get what you give. If you work hard and do a good job for your employer, you will be rewarded. If you give very little, you should not expect much in return.