Developing a Fair Compensation Plan essays

Developing a Fair Compensation Plan essays There are many factors to consider when developing a fair compensation plan. Internal and external equity are key considerations for offering comparable salary and benefits. Internal equity refers to fairness between employees in the same company while external equity refers to relative wage fairness compared to wages with other businesses. In addition to wages, it's important to determine what affects an individual's motivation. In this effort, expectancy theory can be applied. Expectancy theory is based on three perceptions, valence, instrumentality and expectancy. This paper describes the steps to achieve internal and external equity as well as high levels of motivation and cautions of the repercussions for failure to do With regards to internal equity, job descriptions, job analysis and job evaluation help employers compare different jobs and create fair compensation. Job descriptions define the responsibilities, requirements, functions, duties, location, environment, conditions, and other aspects of jobs. Job analysis is the process of analyzing jobs from which job descriptions are developed. Job analysis techniques include the use of interviews, questionnaires, and observation. Data should be gathered from executive management for all departments as well departmental managers and employees. Last, but not least, job evaluation is a system for comparing jobs to determine appropriate compensation levels for individual jobs or elements. Common techniques include ranking, classification, factor comparison and point method and are summarized as follows: Ranking: Compare jobs to each other based on the overall worth of the Classification: Group jobs into an existing grade/category structure Factor Comparison: Identify factors determining the worth of jobs such as skill, responsibilities, effort and workin ...