Rwt1 Compensation Strategy
Presented to: Western Governors University Assessment Code: RWT1
Table of Contents
Executive Summary 3
Research Findings 5
Market Based Pay Structure 5
Traditional vs. Broadband Strategies 6
Total Rewards Strategy 7
References (continued) 11
There are three compensation strategies that we looked at in depth within this paper.
1) Market Based
2) Traditional vs. Broadband
3) Total Rewards …show more content…
Market Based Pay structures are now the most prevalent type of pay structure according to SHRM online staff (11/16/2012) as well.
The Market Based Pay structure is exactly how it sounds. The pay structure is based on what the market is currently paying; i.e. what your competitor is paying for the same position. Society for Human Resource Management (SHRM) toolkit (4/10/2012) suggested that we use industry specific data (page 9). We can request a salary survey from the National Association of Manufacturing (NAM) to create a pay scale that would be competitive with our competitors. In doing so, we will have to decide how to structure this. Are we in a large enough area with enough talent to pay in the 50% range. Which means 50% of the other companies will pay less for the same position and 50% of the companies will pay more.
According to Culpepper and Associates (11/24/2010, 93% of the companies polled use compensation survey market data when designing their structures.
Analysis: Market Based Pay structures are easy to implement and easy to back up as you may use the data from known and trusted associations, such as NAM. The downside of this pay structure is that you are put into a box as to what percentile you pay according to industry standards. If we decide to use this structure, I recommend that we take the 25%, 50% and 75% percentiles for each position so that we may work with a low, middle and high rate of pay.