MGMT 365 Fair and Equitable Compensation Systems Paper Construct a comprehensive research paper on a compensation system that you consider fair and equitab

MGMT 365 Fair and Equitable Compensation Systems Paper Construct a comprehensive research paper on a compensation system that you consider fair and equitable. Use critical thinking to discuss issues from two perspectives: the employee and the employer. Critically interrogate your own concepts about compensation and benefits issues. Use at least three peer-reviwed sources to enhance your discussion and express a clear understanding of the issues.

The paper should be 4-5 pages in length, double-spaced, using proper MLA format. It should also include a cover page and a Works Cited page.

Grading Criteria
Element Description Points
Cover Page

Cover page is properly formatted using MLA style.

5
Body
Identifies a compensation system the author considers fair and equitable.
Uses critical thinking to discuss the issue from the perspective of the employee and employer.
Uses at least three peer-reviewed sources.
4-5 pages in length (not including cover page and works cited pages)
75
Works Cited

Properly cites all sources used in the paper (including the textbook) in proper MLA style.

10
MLA Format

Proper MLA formatting is used throughout the entire paper.

10
Total 100 Fair and Equitable Compensation Systems
From:
James Smith
To:
John Cook
MGMT 365 Compensation and Benefit Systems
March 12, 2019
Smith 2
Personal Perception of Fair and Equitable Compensation
The terms “fair and equitable” are used frequently in many different settings and it is a
statement that is typically up for much debate. But, after being a member of several different
management teams, as well as in entry-level and mid-level positions, I can admit to being able to
see both sides of what that statement can mean in the workplace. And honestly, in my
experience, it simply means different things to different people.
The phrase “fair and equitable” uses two separate words, each with a separate meaning,
and they should not be looked at as being interchangeable terms. And neither of the words
should be confused with having the definition or meaning of “equal”. I believe that this is where
the problem arises; when people believe that something is not “fair and equitable” it is typically
because they do not think that it is fair or equal to them personally.
To me, something that is equitable is actually taking the term fair a step further. Being
fair in the workplace is when something is honest, free from self-interest and is in accordance
with the rules or standards. Equitable is more than just being in accordance with the rules, it is
actually a subjective term since many times it requires judgment, but being equitable needs to be
impartial and without bias. Equity in the workplace exists when everyone has the same access to
opportunities. With regards to compensation there really cannot be a system that is “equal” or
even designed to guarantee that everyone will receive the same outcome. In the workplace
however, the employee’s perception is just as important as whether or not the plan is truly fair
and equitable.
According to the textbook a compensation plan “represents the selection and
implementation of pay level and pay mix policies over a specified time period, usually one year”
Smith 3
(Martocchio 147). And it also states that a “strategic compensation plan reinforces the objectives
of both HR strategies and competitive business strategies” (4). All compensation plans that are
paying for performance should be designed impartially and honestly, whether it is a salary or
bonus type of position. In order to determine the compensation plan a thorough analysis should
be done in advance and it should be comparable to others doing the same type of work in a
similar market or with other employees doing the same job or within the same salary range,
while taking into account any performance differences.
According to an article found on HR-Survey.com the components of a compensation
system should include the following:
•
Job Descriptions
•
Job Analysis
•
Job Evaluation
•
Pay Structures
•
Salary Surveys
•
Policies and Regulations
Compensation is an important strategic organizational tool that assigns a value to
employee performance and may be adjusted according to the needs, available resources and
goals of the organization. Compensation may be monetary, but a total package should actually
have several components that can also include other benefits such as health insurance, retirement
plans, and bonuses. Both the monetary and nonmonetary pieces are considered to be the extrinsic
compensation. But, another facet that I feel is just as important as the extrinsic compensation is
the intrinsic compensation. These are the rewards you basically give to yourself; they are the
psychological result/benefit that comes from performing your job. The more satisfied an
Smith 4
employee is the more productive they will be. I realize that the focus tends to be on the extrinsic,
but as I get older and further into my career path I have found that the feeling of satisfaction and
confidence that comes from a job well done is just as important to me as the monetary aspects.
I found an article online in the Ivey Business Journal titled The Four Intrinsic Rewards
that Drive Employee Engagement. I completely agree with several of the points they make. They
describe four intrinsic rewards and how workers view them:
•
Sense of meaningfulness
•
Sense of choice
•
Sense of competence
•
Sense of progress
The article states “intrinsic rewards are also a relatively healthy and sustainable source of
motivation for employees”. And “overall, the intrinsic rewards seem to create a strong, win/win
form of motivation for both an organization and its employees” (Thomas 2009). Monetary
compensation is obviously still important, but intrinsic rewards are now just as important. In the
Ivey Business Journal it actually states “Many managers do not recognize the importance of the
intrinsic reward and continue to treat financial rewards as the key factor in motivating others”
(Thomas 2009). I completely agree!
Employees are an important resource; they are the human assets of any organization.
They want to feel appreciated, valued and definitely want to be compensated for what they are
worth. I have worked several places where saving a buck for the company was the driving factor,
which just creates an unhappy and stressful working environment, which also typically causes a
high turnover rate. But, on the flip side of that, employers want to recruit quality talent at the best
possible price, without making a dent in their bottom line.
Smith 5
Compensation plans have the ability to affect recruitment and retention rates, along with
employee motivation and satisfaction. I found an excellent article called The Relationship
between Organizational Compensation Systems and Employees’ Productivity that states “A winwin approach will be much more effective, efficient, and beneficial for both parties. Desired
employee behaviors that will favor increased performance are attendance, higher commitment,
increased individual performance, improved recruitment and selection success” (Armache). This
article goes on to explain, “the major objectives that are targeted by many organizations are
profitability, time continuity, growth, vision and mission. In order to meet these goals, employers
need to keep effective use of labor. And in order to increase output, along with employee
performance and production, therefore employee motivation must be created and enhanced.
Properly designed compensation systems enhance these needed employee behaviors, which are
essential in building and implementing business strategies. Therefore, compensation should not
exclusively be viewed as a cost, but more as a means to achieving organizational
goals”(Armache). I feel that making the employees feel motivated and valued is of immeasurable
benefit.
I believe compensation plans should be reviewed annually to make sure that they
continue to meet the needs and the goals of each organization. According to the “Compensation
Handbook” Monitoring compensation practices means anticipating, creating, and/or responding
to change triggers that can affect compensation programs. These change triggers include
business, environmental, cultural, and talent-management factors. Monitoring compensation
practices is a change-management program” (Berger).
The objective of any compensation plan should be to find the right balance (equity)
between the monetary piece and the intrinsic aspect of the system. I think if companies want to
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attract and retain their current talent then they need to invest in them through training and
development balanced with a healthy compensation plan. Not only will this provide the company
with a competitive advantage, but it will also increase productivity and morale.
Ultimately, companies will have to choose and implement a plan that they feel is fair and
equitable for their company compared to their industry. And companies will not be able to please
everyone all the time, which is why individuals will choose to work for a company that they feel
offers the position that they want along with a compensation plan that they feel is fair and
equitable. According to a 1982 article Indirect Compensation: The Years Ahead sums it all up
quite nicely:
“One final bit of advice for those individuals charged with the design and administration of their
organization’s compensation system: communicate with employees” (Sullivan).
Communication is key in every aspect of a business. But, often times management
forgets to include the employees in certain processes which can cause them to feel that things are
not fair or equitable, which just takes me back to what I said earlier about perception. In my
experience, “fair and equitable” simply means different things to different people. It just boils
down to the fact that each of us just has to make our own decisions about what we feel is fair and
equitable for each of us, in each of our positions, in each workplace environment. If you are not
happy, well you can always look for accommodations elsewhere. Just do not forget, the grass
always looks greener on the other side.
One final thought: “The idea is that everyone should have fair access and fair
opportunity. This is not equality of result. It’s equality of opportunity. There’s a fundamental
difference” (Robert Reich).
Smith 7
Works Cited
Armache, Gladys Daher and Jalal Armache. “The Relationship between Organizational
Compensation Systems and Employees’ Productivity.” Ethics & Critical Thinking
Journal, vol. 2016, no. 2, June 2016, pp. 62-74.
Berger, Lance. The Compensation Handbook: A State-of-the-Art Guide to Compensation
Strategy and Design. (1992): n. pg. Web. 15 Mar. 2017.
Martocchio, Joe. Strategic Compensation: A Human Resource Management Approach. 9th ed.
Pearson, 2017.
“Outline and Definitions.” Compensation. N.p., 2015. Web. 14 Mar. 2017.
“Robert Reich Quotes.” Brainy Quote. Xplore, n.d. Web. 15 Mar. 2017.
Sullivan, John F. “Indirect Compensation: The Years Ahead.” IEEE Engineering Management
Review 10.1 (1982): 44-55. Web. 15 Mar. 2017.
Thomas, Kenneth. Ivey Business Journal. N.p., Nov. & Dec. 2009. Web. 14 Mar. 2017.

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