Types of Compensation Strategies: Review and Analysis essay

Is taking the many salary ranges and condensing them down. This is a great way of promoting lateral moves. o People are not staying with companies for the long term, so this will help eliminate the turn over. o Employees will become more diverse and possible find a position with the company they enjoy. o “Compensation programs were designed in the ‘ass and ‘ass for hierarchical organizations. We don’t have hierarchical organizations anymore.

Organizations need to be fluid to move as the markets move. ” (Tyler, 64) Analysis: Broad banding is a great way to narrow down from many salary levels to only 5 to 10. This is a great way to promote lateral moves. C] In this day its really hard to move up in a company so employees are not staying their whole life. o Some drawbacks: C] Many moves need to be put into place to make sure transition is smooth. C] Organization that do not take the time to do this will struggle.

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Two types of stock based incentives: o Stock equity and synthetic stock o Stock equity is the form of physical stock o Synthetic stock is phantom stock Stock equity is when company gives the employees an option to buy stock at market price or below. “For most forms of stock equity, the increase in stock value is not recorded as n expense on the company*s income statement. ” (Watson and Blanchard, peg. 36) Synthetic stock is when company wants to put phantom stock up for employees but not give up any of its equity. o This is a form of compensation that is used by a lot of companies. Give employees a sense of ownership. o Good fit employee stock purchase plan. A great way to build team work within “to be effective, a company’s culture must embrace the team concept, team divisions should make sense, and goals should be clear. ” (Bloch, 92) Company must have team culture and draw lines that don’t create dissentions. Must be all in with new plan. o This will be a good fit as long as the company is willing to do the necessary work beforehand. o Article listed in paper shows that the company must make sure they have a team oriented culture. Also, companies that have made the transition to team oriented compensation have become more successful in their transparency. Recommendation #1: o Start a plan to identify what type of culture that company currently has and what type of culture it will want in the future, this will help With the decision of what type of compensation. Recommendation #2 The second recommendation is to implement a stock option plan. This will be a great way to instill a sense of ownership and belonging for the employees of the company. According to Watson and Blanchard, employee stock option or stock equity is not recorded on the company’s income sheet. I think most employees would love to be able add this to their portfolio. Recommendation #3 o The final recommendation is to put into place a denominated compensation package. The is a great option with a manufacturing o According to an article done by Gerhard, Inform, and Olsen titled Employee Compensation: Theory, practice, ND Evidence, they point out that “In compensating employees, an organization does not have to choose one program over another.

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