A Pay Model and Defining Internal Alignment

9333 words 38 pages

EFFICIENCY * Performance * Quality * Customers * and Stockholder * Costs




EXHIBIT 1.5 The pay Model

ALIGNMENT Work Descriptions Evaluation Analysis Certificate Internal Structure


CONTRIBUTIONS Seniority Performance Merit Based Based Guideline INCENTIVE
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Does one contribute to providing solutions for customers and satisfying shareholders more than another? Think back to our friend from cats and the variety of work required in a touring company to put on the show. Does one actor’s role require more knowledge or experience than another’s? Internal alignment pertains to the pay rates both for employees doing equal work and for those doing dissimilar work. In fact, determining what is an appropriate difference in pay for people performing different work is one of the key challenges facing managers.
Pay relationship within the organization affect all three compensation objective. They affect employee decisions to stay with the organization, to become more flexible by investing in additional training, or to seek greater responsibility. By motivating employees to choose increased training and greater responsibility in dealing with customers, internal pay relationship indirectly affect the capabilities of the workforce and hence the efficiency of the entire organization. Fairness is affected through employees’ comparisons of their pay to the pay of others in the organization. Compliance is affected by the basis for making internal comparisons. Paying on the basis of race, gender, age, or national origin is forbidden in the United States.
External Competitiveness
External competitiveness refers to compensation relationships external to the organization: comparison with competitors. How should an


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