Assignment 2: Compensation Policies Lasa Co 1 2 Assume You A ✓ Solved
Assignment 2 Compensation Policies Lasa Co 1 2assume You Are Leadi
Assume you are leading a team of consultants hired by MPBS to help develop their total compensation plan. MPBS wants to implement a compensation plan to support their business strategy. Your team has completed a preliminary review of the organization, including discussions with management, and compiled initial information about MPBS. That information is detailed in the team report. MPBS views their mission statement as the driver behind the alignment of policies, purposes, and objectives of all operating units in the entire organization.
Your first task is to help the human resources department create a compensation mission statement as the first step in designing their compensation plan. You are to consider the various factors affecting mission statements and objectives and then: Recommend a specific compensation mission statement and the specific objectives of the MPBS compensation system that aligns the compensation plan to the company’s mission and strategy. Provide a rationale to support your mission statement and objectives.
Your second task is to overcome the past reluctance of top management at MPBS to have anyone put much effort into administrative detail. They have generally opted for a quick and easy approach to policy and practice.
You should plan to educate the top management group regarding the need for more sophisticated and detailed approaches to compensation. To do so, you must include answers to the following questions that were posed by the new HR manager. Justify your responses using scholarly sources.
- What are the relevant markets that each of MPBS’s major occupational groups should be compared to? Should MPBS lead, match, or follow competitors? Why?
- How will decisions on external competitiveness help MPBS align compensation policies with mission and strategy? Why is it important, and is it worth the effort and cost for MPBS to specify pay grades and pay ranges? If pay grades are used, is it better to have few or more grades? How should the ranges vary by job type and level?
- How much overlap should be built into the grade ranges? In what ways might the plan MPBS develops and the related compensation policies impact job performance?
To complete this assignment, write a 5–7 page report in Word format and provide rationale and scholarly support. Apply APA standards for writing style. By Wednesday, January 27, 2016, deliver your assignment to the M3: Assignment 2 Dropbox.
Sample Paper For Above instruction
Compensation Policy Development for MPBS: Aligning Strategy with Compensation Systems
Introduction
Developing a comprehensive compensation plan is integral to aligning an organization’s human resource practices with its overarching strategic goals. For MPBS, a company with a mission-driven approach, the compensation system must be carefully crafted to reinforce its commitments and operational objectives. This paper proposes a clear compensation mission statement, outlines objectives aligned with MPBS’s mission, and discusses the importance of detailed compensation policies, including pay grades and ranges, to enhance organizational performance.
Developing a Compensation Mission Statement and Objectives
The foundation of an effective compensation plan is a well-defined mission statement that articulates the purpose of compensation policies in supporting corporate strategy. For MPBS, the proposed mission statement is:
"To design and implement a fair, competitive, and motivating compensation system that aligns with MPBS’s mission of excellence, innovation, and sustainability, thereby attracting, retaining, and rewarding a high-performance workforce."
This mission underscores the necessity of fairness, competitiveness, and motivation—all critical to fulfilling the company’s strategic objectives.
Objectives of MPBS’s compensation system should include:
- Ensuring external competitiveness to attract qualified talent
- Fostering internal equity to promote fairness among employees
- Supporting individual and organizational performance through incentives
- Aligning compensation practices with the company’s strategic focus on excellence, innovation, and sustainability
- Maintaining flexibility to adapt to industry changes and labor market fluctuations
Justification of Mission and Objectives
Aligning the compensation system with MPBS’s mission ensures that pay practices reinforce organizational priorities. According to Lawler (2019), strategic compensation enhances organizational effectiveness by linking employee rewards to business objectives, which motivates desired behaviors.
Further, clearly articulated objectives, such as competitiveness and internal equity, are vital for talent acquisition and retention (Milkovich, Newman, & Gerhart, 2019). They ensure policies support the organization's strategic positioning and operational needs while fostering employee motivation and engagement.
Educating Management on Compensation Detail and External Competitiveness
Relevant Markets and Competitive Positioning
Each occupational group within MPBS should be compared to relevant labor markets to establish competitive pay levels. For example, technical staff might compare to industry-specific skilled trades or engineering markets, while administrative staff could benchmark against local administrative workforce pay scales.
Deciding whether MPBS should lead, match, or follow competitors depends on strategic positioning. Leading can attract top talent but is costly; following may reduce expenses but risk talent shortages; and matching balances competitiveness with cost efficiency (Gerhart & Rynes, 2018). For MPBS, matching or slightly leading industry standards might be optimal to support sustainability and growth.
Impact of External Competitiveness on Strategic Alignment
Decisions on external competitiveness directly influence MPBS’s ability to attract and retain talent aligned with strategic goals. Competitive pay ensures the organization remains attractive, supports employee motivation, and reduces turnover (Bryan & MacKenzie, 2017). It also signals a commitment to fair employment practices, enhancing organizational reputation.
Significance of Pay Grades and Ranges
Specifying pay grades and ranges provides structure and clarity, facilitates internal equity, and simplifies administration. According to Milkovich et al. (2019), pay grades help manage pay dispersion and facilitate performance management. Having too few grades can lead to broad disparities, while too many can cause complexity and administrative burden.
Optimal pay grade design depends on job similarity and organizational size. Generally, more grades allow finer differentiation for complex roles, but simplicity favors fewer categories (Dessler, 2017). Variations in ranges should correspond with job complexity, responsibility levels, and market competitiveness.
Overlap and Performance Impact
Overlap between pay ranges should be sufficient to allow employee mobility and accommodate performance variations without creating pay compression (Gerhart & Rynes, 2018). Typically, 10-20% overlap is recommended. Properly designed ranges motivate employees by providing growth opportunities and recognition of performance differences, which enhances job performance and satisfaction (Milkovich et al., 2019).
Conclusion
Aligning MPBS’s compensation policies with its mission and strategic objectives requires thoughtful development of a mission statement, objectives, and detailed pay structures. Educating leadership on these aspects ensures sustainable organizational performance and talent management. Implementing these policies with rigor supports MPBS’s efforts toward excellence and sustained growth.
References
- Bryan, C., & MacKenzie, K. (2017). Strategic Compensation Planning. Human Resource Management Journal, 27(2), 214-231.
- Dessler, G. (2017). Human Resource Management (15th ed.). Pearson.
- Gerhart, B., & Rynes, S. L. (2018). Compensation Strategies: A Contemporary Perspective. Journal of Management, 44(4), 1429-1454.
- Lawler, E. E. (2019). Strategic Compensation: Aligning Incentives and Rewards. Stanford University Press.
- Milkovich, G. T., Newman, J. M., & Gerhart, B. (2019). Compensation (12th ed.). McGraw-Hill Education.