A market-competitive compensation system is a means of compensating employees at a rate that is similar to other companies with respect to specific positions within their industries.
Text and Images from Slide Chapter 7: There are four objectives that we will address regarding this topic. The first is to explain the concept of market competitive compensation systems and summarize the four activities that compensation professionals engage and to create the systems.
Second, we'll discuss compensation survey practices. That is will be looking at pay mix and pay level.
Establishing market competitive pay systems is a form of job evaluation, but this time we're moving beyond job content to look at external market pay rates. So what are market competitive pay systems?
That's learning objective one, see slides 3 through 6. Well, market competitive pay systems refer to a company's compensation policy. It refers to the imperatives of competitive advantage and the key role in promoting recruitment and retention of talented employees.
There are four steps that compensation professionals can undertake to develop market competitive pay systems, and some of these apply as well to other areas of human resources.
So the first, conduct strategic analyses and this is something that we would hope that other areas of HR are looking at. So now let's give some thought to, in a bit more detail, to these four activities.
The first is strategic analysis. This is something that you should think about with regard to your company, your company as context. Also if you're interested in other companies, you can conduct some research through Google searches to help gather some of this information to give you a picture of a company's strategic position.
Examples of external context are industry profile, information on the competitors, long term industry prospects. We also consider internal factors such as the company's financial condition and its functional capabilities.
That is if it's a manufacturing organization, does it have sufficiently highly skilled employees who can function appropriately in high tech manufacturing environment. Then we want to integrate the internal structure with the external market pay rates identified through compensation surveys and this will also require some analysis.
And then compensation professionals recommend pay policies that fit with their companies standing and competitive strategies. Second learning objective focuses on compensation surveys. The information can be found on slides 7 through We're devoting a substantial amount of time in the textbook and in the slides to compensation surveys because these represent the foundation of sound and effective market competitive pay systems.
So to start off with this, we had one of the main considerations is whether we want to develop the survey ourselves or use an existing compensation survey. We also want to make decisions about what information we're interested in assessing.
So typically we are looking to collect data on base pay, incentive award structure and the mix in level of discretionary employee benefits.
To custom develop these surveys requires a great amount of expertise and usually this is not something you find within many companies. So you will see many companies going to external sources to obtain compensation survey data and what are some of the sources? We can look toward information from professional associations.
Professional associations often have compensation survey data that they share with its member organizations and individual members of the organization.
Members are more likely to provide information in anonymous surveys to their professional associations because they all have a common interest in understanding what the compensation pay rates and structures are in a particular profession.
Companies are interested in learning this information to help them structure competitive pay rates to get and keep the best employees and individuals are interested in learning what the competitive pay rates are so that as they seek employment, they understand their market value.
There are many different professional associations that we can find specialized in particular occupational groups, such as engineers and even more in particular, chemical engineers as an example, and in industry association whose members are companies.
So for example there is the American iron and steel institute comprised of 31 member companies including integrated and electric furnace steel makers. You can go to industryweek. Consulting firms represent another source of compensation survey information.Building market competitive compensation system 1.
Building Market Competitive Compensation System By Dr. G C Mohanta, BE, MSc (Engg.), MBA, PhD (Mgt.), Professor, Al-Qurmoshi Institute of Business Management, Hyderabad, India Compensation Surveys In compensation surveys salary and market data are collected. Franklin Gothic Book Arial Franklin Gothic Medium Wingdings 2 Calibri Comic Sans MS Trek 1_Trek 2_Trek 3_Trek 4_Trek 5_Trek 6_Trek 7_Trek 8_Trek Building Market - Competitive Compensation Systems The Basics of Market Competitive Pay Systems Major activities for market competitive pay 1.
market-competitive pay systems: the basic building blocks Market-competitive pay systems represent companies’ compensation policies that fit the imperatives of competitive advantage. Discuss and explain the considerations when building market-competitive compensation systems.
|Compensation Systems: Design and Goals | Compensation & Benefits | HR Toolkit | r-bridal.com||Legal compliance Compensation defined Compensation can be defined as all of the rewards earned by employees in return for their labour.|
|Table of Contents||Market competitive pay system should address these overall objectives of the company.|
|7 Keys To An Effective Compensation Strategy — The Thriving Small Business||Text and Images from Slide Chapter 7: There are four objectives that we will address regarding this topic.|
A company that strives to be competitive in whatever market they belong to will always look for strategic and competitive advantages. Solution details. Solution # (Solution document) What are the considerations when building market-competitive compensation r-bridal.com To build a market-competitive pay system a company must: Conduct Strategic Analyses - When a company conducts a strategic analysis of both the external market (industry profile, competitor information, long-term growth prospects) and internal factors (functional capabilities, financial situation) it is looking for the parameters or the limits that it can .