HRM 7002 WEEK 4 ASSIGNMENT Construct a Compensation Design Model
Week 4
Designing Compensation Systems
Compensation is a big factor for individuals when they are seeking a job. Consider if you worked in an organization where there was a large disparity in pay among employees who did practically the same job. Or the organization was finding difficulty filling a vacancy due to compensation, while the competitor was filling the same vacancy without difficulty. Unfortunately, you may have worked or are currently working in an organization where this may be the case. This is the result of poor compensation system design. Developing a strong compensation structure allows an organization to provide competitive wages that are also equitable across the organization.
Several components are included in the compensation system design process. First, a job analysis must be conducted for each job to determine the Knowledge, Skills, and Abilities (KSAs) associated with each job. Next, each job is thoroughly analyzed to identify tasks and qualifications needed for that role, and then a proper compensatory value to that role is established concerning both internal and external equity. As the appropriate analysis is completed, comprehensive job descriptions are composed, including the necessary job specifications and accompanying competencies. There are many components to consider for comprehensive job analysis. This approach enables you to accurately pinpoint how to evaluate each job in terms of performance criteria and valuation.
External competitiveness is another important factor when designing compensation plans. To attract and retain employees, organizations need to know if the wages and salaries they are offering are competitive with other organizations. It also helps organizations to ensure that they maintain internal pay equity. To identify the market valuation of each job, an external evaluation can be completed to determine what the average salary is for a given position. Another method that could be deployed is remuneration surveys which can be used to gather information on starting wages and base pay rates. These surveys can be administered either internally or externally. However, if administered internally, this could give employees an opportunity to help shape the compensation structure.
Additionally, the pay structure is part of the compensation design where organizations group jobs into pay grades, which are then used to group the jobs. Then, pay ranges are set for those groups. The reason for setting up pay groups is to develop a pay structure for an entire organization rather than an individual pay range for each position.
There are numerous payment systems associated with different work types. For example, the most common payment systems found within an organization are hourly or salary. However, there are many ways that these types of systems can be structured, including Performance-based Systems, Merit Pay Systems, Single Rate Systems, and Flat Rate Systems. There are several more to explore. However, you will have a good idea of some of the systems that organizations use.
This week, you will review approaches to gathering competitive intelligence regarding job compensation and related benefits to prepare a PowerPoint presentation.
Weekly Resources and Assignments
Review the resources from the Course Resources link, located in the top navigation bar, to prepare for this week’s assignments. The resources may include textbook reading assignments, journal articles, websites, links to tools or software, videos, handouts, rubrics, etc.
Week 4 Resources
• Employee Benefits Design and Compensation (Collection)
Biswas, B. D. (2014). Employee benefits design and compensation (collection). FT Press. eISBN: 978-0133764710
Read Chapter 1: Introduction: Setting the Stage.
• Executive Compensation and Employee Remuneration: The Flexible Principles of Justice in Pay
Magnan, M., & Martin, D. (2019). Executive compensation and employee remuneration: The flexible principles of justice in pay. Journal of Business Ethics, 160(1), 89–105.
• The Challenges of Designing Effective Compensation Plans
Juneja, P. (2021). The challenges of designing effective compensation plans. Management Study Guide.
• How to Do a Salary Equity Study: With an Illustrative Example from Higher Education
Taylor, L. L., Lahey, J. N., Beck, M. I., & Froyd, J. E. (2020). How to do a salary equity study: With an illustrative example from higher education. Public Personnel Management, 49(1), 57–82.
• The Color of Money
Tucker, M. A. (2021). The color of money. HR Magazine, 66(1), 58–64.
Optional Resources
• 6 Different Types of Compensation Plans & Benefits
Mistry, P. (2017, July 21). 6 Different types of compensation plans & benefits. The HR Digest.
• Compensation: Outline and Definitions
HR-Guide, LLC. (2015). Compensation: Outline and definitions. HR-Guide.
• Kaltura User Guide
National University (2023). Kaltura User Guide. Graduate Studies Support Center.
This resource includes instructions for recording and uploading videos into courses using Kaltura.
Week 4 – Assignment: Construct a Compensation Design Model
Instructions
This week, you will prepare a narrated presentation using PowerPoint presentation software. You will create your audio presentation by using an audio/video capturing tool located in NCUOne. To access the capture tool, follow the tutorial found in this week’s resources.
You are the HR manager for a very large nonprofit organization that is planning to grow to its next phase and will need to increase its public relations. Senior leadership has asked you to develop a PowerPoint presentation that they can share with the Board of Directors that depicts a compensation model for creating a whole new public relations department of 15 diverse staff members.
Starting with a Director of Public Relations and mapping down to all of the direct reports and their direct reports, design a compensation model for this department. Include the various aspects of the compensation design model (job analysis, job documentation, job evaluation, and pay structure). See the HR Guide in this week’s resources for the definitions of each of the components of a compensation system.
Be sure your presentation includes a step-by-step illustration of each part of the process.
Length: 5 to 7-minute video accompanied by 12-15 slides (with a separate reference slide)
Notes Length: 200-350 words for each slide to serve as your transcript.
References: Support your presentation with at least 3 scholarly resources.
The completed assignment should address all of the assignment requirements, exhibit evidence of concept knowledge, and demonstrate thoughtful consideration of the content presented in the course. The writing should integrate scholarly resources, reflect academic expectations and current APA standards
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