Its Here
The Foundations of a Compensation Strategy
Anna Martin
BUS 434 Compensation and Benefits Management
Instructor Steven Foster
February 11, 2013
The Foundations of a Compensation Strategy Compensation strategy consists of approximately four components a company must have in place to become or remain competitive in the global economy. It very closely relates to the company’s organizational strategy overall. “To ensure accomplishment of organizational strategy begins with determining (1) the work that must be performed by some work unit or individual, (2) the kinds and levels of knowledge and skill required, (3) the quality of people needed to promote organizational success, and (4) the rewards the organization can offer to its members that promote a work culture that ensures accomplishment of organizational strategy” (Henderson, 2006, p. 5). The most effective compensation strategy is one that develops a clear link between the following components: job description, performance evaluation, internal salary comparison and external salary survey. Job description is “a written statement of what an employee is expected to do, how it is done, and why it is done” (Job Description, 2003). This component derives from the process of job analysis which involves identifying and describing what happens on a job using a number of methods to collect data. The data determines working conditions, job specifics, required tasks and the required knowledge and skills essential to performing them and employee job performance. This leads us to performance evaluation which is also known as performance appraisal. The performance appraisal is “the process whereby the contributions and results achieved by each employee are recognized and measured and then used to change or modify the rewards to be made available to each employee” (Henderson, 2006, p. 310). This basically determines if an employee is to receive a raise or other compensation as directly related to his/her performance
Anna Martin
BUS 434 Compensation and Benefits Management
Instructor Steven Foster
February 11, 2013
The Foundations of a Compensation Strategy Compensation strategy consists of approximately four components a company must have in place to become or remain competitive in the global economy. It very closely relates to the company’s organizational strategy overall. “To ensure accomplishment of organizational strategy begins with determining (1) the work that must be performed by some work unit or individual, (2) the kinds and levels of knowledge and skill required, (3) the quality of people needed to promote organizational success, and (4) the rewards the organization can offer to its members that promote a work culture that ensures accomplishment of organizational strategy” (Henderson, 2006, p. 5). The most effective compensation strategy is one that develops a clear link between the following components: job description, performance evaluation, internal salary comparison and external salary survey. Job description is “a written statement of what an employee is expected to do, how it is done, and why it is done” (Job Description, 2003). This component derives from the process of job analysis which involves identifying and describing what happens on a job using a number of methods to collect data. The data determines working conditions, job specifics, required tasks and the required knowledge and skills essential to performing them and employee job performance. This leads us to performance evaluation which is also known as performance appraisal. The performance appraisal is “the process whereby the contributions and results achieved by each employee are recognized and measured and then used to change or modify the rewards to be made available to each employee” (Henderson, 2006, p. 310). This basically determines if an employee is to receive a raise or other compensation as directly related to his/her performance
References: Early Childhood Education Salary. (2013). Retrieved from http://www.indeed.com/salary/Early-Childhood-Teacher.html Henderson, R.I. (2006). Compensation Management in a Knowledge-Based World, 10th Edition. Pearson Learning Solutions. Retrieved from <vbk:0558582451>. Job Description. (2003). In The New Penguin Business Dictionary. Retrieved from http://www.credoreference.com.proxy-library.ashford.edu/entry/penguinbus/job_description Richards, P. (2013). Salary Range for Child Care Teachers. Retrieved from http://work.chron.com/salary-range-child-care-teachers-4771.html