Compensation and Benefits

April 2022 Examination

Q1. Describe what compensation is and give at least three examples of core compensate
practices followed in organizations. (10 Marks)

Answer 1.
Introduction
Repayment can be described as the systematic technique carried out by way of any employer
towards its employees inside the manner of presenting some financial fee in alternate for the
work they're doing for the organization. There are numerous methods via which any employee of
an organization can reap this repayment, including task performance, job delight, and
recruitment support. Numerous different matters may be defined further, like how the
compensation is used and the kinds that any business enterprise will use of the repayment
system. The following part will briefly speak about the repayment device and provide an idea of
a minimum of three forms of compensation that an employer will use. There are numerous
additives of the compensation system, which are also mentioned in the next component. There's a
scientific manner of using this repayment system, and each enterprise is using it in that way
handiest.

Concept and analysis

Repayment is used in the employer as a device of control for diverse functions for an
organization to similarly the lifestyles of the enterprise. There may be some business want that a
company has in their path, just like the dreams and to be had assets additionally, and through this
thing, the compensation gadget is adjusted for any employees. There are also many ways in
which compensation may be used in an enterprise, including recruitment and holding certified
employees. This technique is not an unusual goal for many personnel shared using them. On
occasion, the availability and the bundle of an eligible employee rely upon the market factors
because these are beyond the management of an organization. There may be something this is in
their possession for a company, like the new hiring and advertising the range of packages they
are offering to their new hires. The alternative additives of repayment may be to grow or keep
the morale or pleasure of the employees. There are many types of reward rules additionally
provided to the employees to inspire height overall performance of the employees and this is a
manner of repayment machine additionally. The compensation gadget is used to gain an
organization's inner and external fairness. It also helps to lessen the turnover and encourages the
company’s loyalty. Thru the repayment system, the organization can even try and adjust the
solidarity in control via a few negotiation practices among the employees.

There are many components that a compensation gadget will include in its process for any
management machine in the company. The compensation device is used to study the cost of the
employees' positions. The compensation gadget's additives to assess such positions are the
activity description, activity evaluation, job evaluation, the written process, and the maximum
vital, the profits structure given in the letter. The job description will permit describing the
requirements and responsibilities of that particular role to be presented to a person. It will also
consist of a few different vital factors like the functions, duties, area, environment, conditions,
etc. An activity evaluation will help analyze the jobs, and it is best developed from the job
description. This technique will encompass interviews, observations, and questionnaires. Then
comes the process evaluation, in which the comparison of jobs is made for developing the same
compensation ranges for that particular subject of employment. The activity assessment will
enforce some strategies, including ranking, component contrast, factor method, and type.

The earnings shape will assist in standardizing the compensation machine. It also includes the
pay shape in which the grades are allotted primarily based on their constant earnings stages. The
survey in the salary tiers will offer a concept of the revenue distribution system. It is finished via
collecting the salary data from the marketplace, and it will include the typical salary, inflation
indicators, and price of living. The particular sorts of repayment businesses can use in
differentiating the degrees of revenue they're imparting to their employees. The compensation
system may include the base pay, overtime pay, commissions, inventory alternatives, bonuses,
benefit pay, profit sharing, and a few styles of allowance like travel, meal, and housing
allowance. The compensation plans should be appropriately completed, like developing a
software outline to conduct the repayment device properly.

Figure 1 – Compensation System

Conclusion

Right here, it could be concluded that the compensation gadget will help the employees of any
employer to do their work efficaciously. If the organization has safely implemented this
machine, its employees will be continuously influenced and work extra productively. This
machine is suitable for every organization as it will assist in recruiting and preserving
employees. The organization will earn extra sales, which is an excellent deal profitable for any
employer. With the correct job description analysis, the company can quickly put into effect the
reimbursement machine. There ought to be some philosophy to develop the reimbursement
device for any business enterprise.
Q2. Explain how internally consistent compensation systems and competitive strategy
relate to each other. Explain the basic building blocks of compensation system. (10 Marks)

Answer 2.
Introduction
The internally consistent compensation structures can help achieve competitiveness inside an
organization's market. These two techniques are related to every different, and many companies
have carried out those strategies simultaneously and have excellent results similarly. There are
many basic building blocks or repayment systems included, which might be mentioned in the
next part of this answer. Within the internally regular repayment device, it gives fairness, which
can be similarly defined as the cost earned through funding. The companies need constant inner
compensation because it will assist the employer's growth by making a significant number of
earnings. It'll assist in renting more personnel who will further provide their efficient skills to
work inside the organization to achieve their dreams. Different things will be mentioned in the
next element.

Concept and analysis

As we recognize, that compensation device is carried out by way of the control as a tool within
the organization to acquire its intention and encourage the person to be in their organization. The
aggressive method can be described because of the lengthy-term plan utilized by the organization
to advantage some competitive benefits within the market over its competitors. Each of the
techniques is utilized by the corporation in a long-term plan, and both techniques provide a few
advantages to its management machine. From a few evaluations, it has also been seen that each
of the techniques is used by many agencies to improve their enterprise from different businesses.
Through that, they've carried out their desires for a long-term period. The identical way is going
for the approach used for the agency's competitiveness so that they may hold to do their business
in the marketplace. The corporations use the competitive approach to create a shielding function
in the marketplace, and through this, it's going to generate a high return on investment.

Those sorts of strategies are helpful for the corporations when the organization could be very
aggressive in its industry and afford a few similar merchandises with other groups inside the
industry. For example the within the mobile phone market, in this marketplace, every corporation
is using the competitiveness method to be in the market for a long time. Before enforcing this
competitiveness approach, the organization desires to analyze its electricity, weaknesses,
possibilities, and threats within the enterprise. After this analysis, the organization can look at
that on which they can proceed to head by imposing the competitive approach. In addition, this
evaluation will also encompass the proper knowledge of the competition. It also desires to
evaluate all of the patron's needs and wants; those all are very important in the strategy of
competitiveness advantage. There are many varieties of aggressive techniques used by
companies that may be defined with Michael porter's idea. This theory similarly has dispensed
into four parts which consist of price leadership, differentiation, value cognizance, and
differentiation focus. Cost leadership may be described with cell phone organizations like
Micromax providing an excellent acceptable telephone inside the marketplace with the same
features as the premium phone businesses like Apple and Samsung offer.

Figure 2 – Building Blocks of Compensation System

Building blocks of compensation system can consist of many factors required in the repayment
machine. Still, the essential elements needed to build a repayment machine properly are the goof
praise possibility for the worker, the real reward, and evaluating the worker's performance. Those
all are required to be analyzed effectively and there ought to be a few performance management
applications carried out to implement this machine within the organization. The building block of
repayment is a human resource management plan done by the HR branch of the business
enterprise. With the aid of growing this repayment plan with the aid of the human resource
management, the employer can appeal to and preserve the personnel. This type of design will
also assist in motivating the winning body of workers of the administration. This repayment plan
can range from company to company. Human functional resource management additionally
presents a sensible and complete budget to the companies.

Conclusion

Here it may be concluded that the groups support planning the compensation system to
encourage the employees. Like the begin-up, organizations will observe a compensation
approach wherein the employees might be attracted to be employed by using this enterprise. The
massive companies will comply with this compensation device to permit the person to be
motivated to work. For that reason, it may also be said that the competitive advantage strategy
and the compensation method exceptionally go with every different because of their working
system. each of those strategies has helped any company gain its goal and maintain its role inside
the market.

Q3. As the Office Manager at Custom Carpet Cleaning, Bob Huffman must handle a wide
range of responsibilities. As the company has grown to over fifty employees, the human
resource management practices of the company have become a more significant part of his
role. Bob has had little formal education or training in human resources management, but
works hard to ensure that the company manages its’ staff effectively. With a new fiscal
year approaching, Bob is examining many aspects of the company’s budget. As he reviewed
the payroll budget, he noted some wide variations in pay rates of the carpet cleaners across
the company’s seven locations. He also noted that some of the pay rates seemed to be
higher than what the competition pays. Pay rates and pay increases are determined at each
location by the local supervisor and as a result, there is not consistency in the company’s
pay practices. Some of the pay differences may be justified. Different locations work on
different types of assignments and the jobs the carpet cleaners do may be different. For
example, some locations work primarily at residential clients. Cleaners at these locations
work directly with the clients and need strong sales and customer service skills in addition
to carpet cleaning skills. Whereas locations that work primarily on commercial property
have very little client contact, but they face tougher cleaning challenges and must have
stronger technical skills. However, Bob does not have a good understanding of which
locations have which kinds of responsibilities. He has done some research online and
believes that a good starting point for examining the company’s compensation practice
would be to conduct a job analysis and create written job descriptions. Based on what he
learned through his research, he has decided to create a questionnaire to complete the job
analysis process and he will ask one cleaner from each location to complete it. The
questionnaire asks the employee to explain the tasks they complete and how they complete
them. It also asks the employee to describe any equipment used. Bob plans to use the
information collected in the questionnaires to create written job descriptions. Once he has
the job descriptions complete, he will use them to help determine if internal pay rates are
consistent and if the company is paying competitively in the market.

a. Which job evaluation technique do you think Bob should use when he gets to that step?
Why? (5 Marks)

b. Make a final recommendation. What should Bob's approach be (market meet, market
lag, market lead)? (5 Marks)

Answer 3a.
Introduction
Task evaluation strategies may be explained as the manner this is used by organizations to make
sure that the exceptional work that is being finished is up to the standard. The primary problem
inside the bob situation is that many employees are not centrally dealt with, and raises are given
from the region itself.

Concept and analysis

The technique that may be used here using BOB to ensure a precise flow of labor is the
technique of thing assessment. Element evaluation can be defined as a systematic and scientific
technique designed to evaluate jobs based on ranks and other elements. That is one of the
primary methods used for task evaluation as it offers some of the best answers to numerous
situations. There are specific contracts on which these are checked, based explicitly upon the sill,
effort, vicinity, obligation, and operating circumstance. These are a few parameters that are used
for assessment. Therefore it could be stated that BOB can use this method the make sure that he
can make certain that the evaluation technique is carried out in a higher way.

Consequently, this approach can help ensure that the cleaners are evaluated better. This can assist
ensure that the places are correctly considered as distinctive area needs have various variables
that can be checked. The website online that uses agreement cleansing has multiple other
alternatives available. There want to be numerous questions that may be set for the betterment of
the present-day scenario. The locations that work in business residences have different cleaning
needs, and their desires to be a different method of evolution for this case. Therefore, it may be
stated that the general approach that can be used to control and develop a proper set of the
questionnaire is the usage of the issue contrast. Evaluating different factors in the procedure of
running BOB can make sure that what the necessities that are needed are. Further, it may help
ensure that additional work can be given in any area, one of the best starting points.

Conclusion

Consequently, concluding the topic, it can be stated that the method this is had to be used for the
manner of process evaluation using BOB is the technique of factoring approach. This approach
ensures that there's a unique process upon which the task is defined, and this will assist in
providing the right ranking is given.

Answer 3b.
Introduction

The final recommendation needs to be furnished by BOB desires to make sure that there are
techniques required to be made certain that the suggestion that the technique is with marketplace
lag. This procedure helps ensure that there's proper cash flow and that there is the right business
structure.

Concept and analysis

The market lag is one of the practical techniques used by HR to make sure that the method that
lags the marketplace can also do so because it enables financial resources at better costs. This
ensures that there is a right cash float within the market. One of the other significant approaches
that can be sued via BOB is applying the aggregate of alternatives. The mixture option uses all of
the techniques like market lag, market hike, and marketplace equal. These techniques assist
within the manner of ensuring that diverse options are available. This ensures that numerous
assets are given exceptional salaries. The business enterprise can select the lead marketplace
during the tight labor market for positions that are one of a kind to fill. This technique
additionally requires a right observe-up to be finished on a regular foundation. In addition, while
this option is followed, the personnel's internal pay is affected, which reduces the number of
personnel operating. When the market suit is used, then the charge of the employees is the same
as the pay of others. Therefore it may be said that among lead, lag, and meet, all of the 3 have an
extraordinary reason and use them as in line with abilities. IN this case, this may be achieved for
the other locations which are present. Since the primary pay of the numerous regions is different,
marketplace lead may be used over there, and a minimum amount may be paid for the identical.

Further market lag may be used for the locations wherein it's miles client-centric, and less work
may be achieved. Additional market meets may be used in more familiar regions. Because this
may be a new procedure, it must be determined nearby.

Conclusion

As a consequence of concluding the topic, it can be said that the aggregate of all the three
strategies is one of the subtle ways to make sure that work is achieved correctly. Consequently,
BOB must use all the techniques inside the specific places to ensure that each region receives
what is required.