Read the â€œSo You Want to Lead the Orchestra!â€ case study at the end of Chapter 3 (along with the follow up â€œStill Your Turnâ€) and answer the questions. In your response, use the chapter readings, the assigned article below, and one other from the internet or the Regent library databases to support your points.
Read this article in preparation for this dialogue forum: Naughton, M. (2005). A theology of fair pay. Regent Business Review, Issue 15, 9-14.
The Pay Model
This week we’ll introduce the key components of a compensation system. The definition of compensation is initially explored from the perspectives of the society, key stakeholders, the organization, and the external environment. Next, the various forms of pay are identified and defined. The major focus is presenting a pay model that provides a structure for understanding compensation systems. The three main components of the model are (1) compensation objectives, including the importance given to ethics; (2) policy decisions that guide how the objectives are going to be achieved; and (3) techniques that make up the pay system.
Strategy: The Totality of Decisions
Next, we’ll examine the key aspects of decisions taken during strategy creation on compensation. The key premise is that the way employees are compensated can be a source of sustainable competitive advantage. Two alternative approaches are highlighted: (1) â€œbest-fitâ€/contingent business strategy/environmental context approach and (2) â€œbest practicesâ€ approach. The best-fit approach presumes that one size does not fit all. Managing compensation strategically means fitting the compensation system to the business and environmental conditions. In contract, the best-practices approach assumes a universal best way exists. The focus is not on what the best compensation strategy is but on how to best implement the system.
Defining Internal Alignment
Finally, we’ll discuss internal alignment and how it affects employees, managers, and employers. Internal alignment refers to the pay relationships among jobs/skills/competencies within a single organization. An internal pay structure â€“ the array of pay rates for different jobs within an organization â€“ is defined by (1) number of levels of work; (2) the pay differentialsbetween the levels; and (3) the criteria used to determine the levels and differentials. Pay structures are shaped by both external and organization factors, including economic, societal, and organization-specific factors.
Newman, J.M., Gerhart, B., & Milkovich, G.T. (2017) Compensation, 12th Edition. New York: McGraw-Hill Education. (ISBN: 978-1-259-53272-6)
Read: Milkovich & Newman, Chapters 1-3