Week 3 Discussion Question 2
Answer in 100 word count Should compensation adjustments be based on market movement, meritorious performance, or a combination of both?
Respond to other post in 100 word count
I think that the way a persons compensation should be based is definitely on market movement and performance. I think for any organization and I will use my company that I work for as an example. They look at the market share and also at the experience the candidate has. I will say that the old company I worked for would hire in people with no experience and pay them more than the people who are at the company for the past 10 years. This is where companies can really get themselves into trouble or even worse hurt the moral within the company. I do think that its not always about the highest salary you get the best employee you should have some kind of format on how you bases your compensation to employees.
Compensation Adjustment: Market Movement
A compensation adjustment can be a change in rate of pay, whether good or bad; such as in getting a raise, or demotion. A compensation adjustment can also be a change in pay structure. For example, going from hourly to salary, or going from salary to commission, or some hybrid (Kappel, 2017).
However, a market movement adjustment is about ensuring the company is compensating its personnel at rate that is comparable to industry standards. A market movement adjustment is based on the percentage the broader industry has modified its wages based on a specific time period, generally 3-5 years. This is an important calculation in competitive markets where companies are vying for the most qualified personnel (PSBA, 2018).
Kappel, M., (2017), How and Why To Make an Employee Pay Adjustment. https://www.patriotsoftware.com/payroll/training/b…
PSBA, (2018), Understanding Market Movement Percentages Can Help With Making Salary Decisions
https://www.patriotsoftware.com/payroll/training/b…
3. think compensation should be based on a little of both market movement and meritorious performance. It is important for an organization to evaluate the market to make sure that they are offering a competitive salary rate along with having a fair compensation as well. Employees not only enjoy monetary compensation but also like to know that they are being rewarded for their hard work and what they contribute to the organization. Giving employees praise and recognition for hard work is importance and may also increase productivity for those who are truly dedicated to what they do.
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