Human Resource Management: Compensation

Topics: Pension, Fourth grade, Insurance Pages: 6 (1771 words) Published: May 25, 2010
Career Development Plan IV
InterClean is entering a new strategic target and upper management has asked for a proposed compensation plan purposely for the new sales team. Recommendations for the new compensation plan will be submitted to the human resource department manager for endorsement. The foundation of the new compensation plan was developed after reviewing the job analysis, training program, and performance management plan. The plan includes a description of the prepared proposal and the explanation of an effective pay system. The three parts of a total rewards package to encourage employees to achieve highest performance is implemented in this strategic plan. The compensation plan also illustrates the designed benefits and incentive programs for the mutual advantage to the employee and employer. Pay Structure

Compensation is the benefits from the employer to the employees for achieving the company’s objectives. According to the author of Managing Human Resources, compensation includes direct cash payments, indirect payments in the form of employee benefits, and incentives to motivate employees to strive for higher levels of productivity (Cascio, 2005). This compensation plan consists of a pay structure, benefits, and incentive programs. The pay system and benefits can be modified as the job requirements change. New incentive programs can be developed and implemented to motivate high performance. Prominent compensation and benefits systems attract and retain high performance staff.

An effective pay and incentive system is developed with four main factors such as updated job descriptions, job evaluation method, pay surveys, and pay structure (Cascio, 2005). Assigning a dollar value to jobs can be established by using the point method that develops the pay grades from the least amount to the greatest amount. The point method connects the job with the pay structure. After identifying and surveying the average pay in the labor markets and evaluating the budget, this pay system was developed as shown below: GRADEPOINT SPREADMIDPOINTMINIMUM RATE OF PAYMAXIMUM RATE OF PAY 260-8070$12.00$14.25


This pay structure contains the pay grade, point spread, midpoint and the minimum and maximum rate of pay. This scale can be used to determine a fair and equal employees’ pay rate. Employees will receive an increase of pay every six months after evaluation until the maximum rate has been reached. This rate does not include annual increases applied as job requirements change. Developing a pay structure has three main challenges such as determining the comparative information value of a specific job; the suitable pay range for a job with the stated value; and the value of each job in the allotted pay range (Heathfield, 2009). After comparing the new sales team’s experience with his or her specific job and selecting a appropriate pay range, the allotted pay range was determined. Research illustrates that top management in retail average 47,849 annually or 23.00 hourly (, 2009). The vice president of sales position at InterClean was allotted a grade 8; and the manager position was allotted a grade 6. Eric Borden has several experiences but this is his first position as vice president. His point spread was allotted 186 points. Since grade 8 point spread begins with 186, Borden’s starting pay would be $21.85. In six months, he will be eligible for an increase until maximum rate of $27.06 is reached. With Tom Gonzalez’s experience, his point spread was allocated 154, which his starting pay would be $19.59. The total was determined by subtracting the minimum of grade 6 from the maximum of grade 6 then adding the reminder to the minimum. After carefully surveying average earning for salesperson position, my recommendation is to allocate...
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