HIS 223 Southern New Hampshire University Modern War & Society Research Paper Both during and after World War I, fierce debates raged over the question of whether large-scale offensives like Verdun and the Somme were fruitlessly wasteful or, as the general who planned these initiatives argued, painful but necessary and even productive.
In this analysis paper, you will build on your skills by analyzing and comparing two primary sources. Select one of the following options:
1. Compare Douglas Haig’s final dispatch and David Lloyd George’s comments on the battle of the Somme
2. Compare Erich von Falkenhayn’s justification of the Verdun offensive and Erich Ludendorff’s assessment of Verdun.
Use the attached guidelines and rubric. OL 211 Milestone Four Guidelines and Rubric
Overview: This milestone focuses on the topic of this week’s lessons: compensating employees. Using the material on compensation provided in this week’s
lesson and the case study, write a short paper in which you:
Describe the compensation philosophy of Maersk and how the market influences this philosophy.
Determine the value of salary surveys to an organization.
Describe the advantages of discretionary benefits to Maersk.
Guidelines for Submission: Your submission should be two pages in length and double-spaced using 12-point Times New Roman font. Be sure to list your
references at the end of your paper. Submit journal assignment as a Word document.
Instructor Feedback: This activity uses an integrated rubric in Brightspace. Students can view instructor feedback in the Grade Center.
Critical Elements
Compensation:
Compensation
Exemplary (100%)
Meets “Proficient” criteria and
description is clear and detailed
Proficient (85%)
Describes the compensation
philosophy and describes how
the market influences this
philosophy
Compensation:
Salary Surveys
Meets “Proficient” criteria and
uses evidence to substantiate
claims
Articulation of
Response
Submission is free of errors
related to citations, grammar,
spelling, syntax, and
organization and is presented in
a professional and easy-to-read
format
Determines the value of salary
surveys, and describes the
advantages of discretionary
benefits
Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
Needs Improvement (55%)
Describes the compensation
philosophy and describes how
the market influences this
philosophy, but description is
cursory or inaccurate
Determines the value of salary
surveys but does not describe
the advantages of discretionary
benefits
Submission has major errors
related to citations, grammar,
spelling, syntax, or organization
that negatively impact
readability and articulation of
main ideas
Not Evident (0%)
Does not describe compensation
philosophy
Value
46
Does not determine the value of
salary surveys
46
Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas
8
Earned Total
100%
9-1
What Is Compensation?
Compensation consists of three main components. Direct compensation encompasses
employee wages and salaries, incentives, bonuses, and commissions. Indirect compensation
comprises the many benefits supplied by employers, and nonfinancial compensation includes
employee recognition programs, rewarding jobs, organizational support, work environment, and
flexible work hours to accommodate personal needs. See Figure 9.1.
The way these three components of compensation are allocated sends a message to the
employees about what management believes is important and the types of activities it
encourages.Footnote Furthermore, for an employer, compensation constitutes a sizable
operating cost. Ravin Jesuthasan, compensation specialist at Towers Perrin, notes, “Labor
costs are a significant portion of expenses for any organization and a very substantial portion for
some, but companies continue to spend on pay programs without any evidence of business
relevance.”Footnote This means that compensation should be managed strategically to ensure
that costs are kept down while employee motivation and performance are kept up. Achieving
such a balance is no easy task.
In this chapter, we will help you learn how to strategically align the three aspects of
compensation with an organization’s objectives, design a pay mix based on the compensation
strategy, implement the mix using a series of pay tools, and assess the compensation system
using a scorecard. We will also discuss how government regulation might influence these
decisions about compensation. See Figure 9.2 for details. In Chapter 10 we will review financial
incentive plans for employees. Employee benefits that are part of the total compensation
package are discussed in Chapter 11.
9-2a
Linking Compensation to Organizational Objectives
The financial crisis of 2007–2010 changed the landscape for compensation. Now shareholders,
the government, and the public all heavily scrutinize companies for how much they pay their
people. For example, due to complaints of bloated federal government salaries, exorbitant Wall
Street banker bonuses, and overly generous autoworker benefits, managers are trying to
ensure that their compensation plans are in strict alignment with the organization’s objectives.
In particular, a Bloomberg National Poll showed that more than 70 percent of Americans thought
big bonuses should be banned for Wall Street companies that took taxpayer bailouts. A law
aimed at giving shareholders more of a say in the compensation of bankers was passed in July
2010.Footnote Wall Street banks are now much more careful to reward employees only when
they perform in line with organizational objectives. Furthermore, American President Obama
enacted a three-year (2011–2013) freeze on federal salaries to help the government achieve its
objectives of reducing the deficit. President Obama stated that “[the freeze] would save…$28
billion in cumulative savings over the next five years.”Footnote Finally, due in part to poor
strategic decisions, General Motors (GM) experienced high pension, wage, and benefit costs
that the company could not sustain in the financial crisis. As a result, GM ended up laying off
more than 107,000 employees during the financial crisis.Footnote While the United Autoworker
Union (UAW) was partly to blame for its lack of flexibility in adjusting salary and benefit plans,
GM managers were also guilty for not aligning compensation with organizational objectives to
compete with foreign automakers.Footnote
The new compensation landscape requires that managers be more strategic about their
compensation decisions. Managers must first and foremost understand the strategic objectives
of the organization in relation to the industry in which it operates. Next, they need to move away
from paying for a specific position or job title to rewarding employees on the basis of their
individual competencies or work contributions to these organizational objectives. In fact, a
sample of Fortune 500 companies headquartered in America, Europe, and Asia showed that
pay for performance that is linked to organizational objectives is a primary component of most
compensation systems.Footnote Another study showed that 91 percent of participating
companies link their pay strategy with organizational performance. The study found that a
written compensation plan indicates that senior management understands and is committed to
aligning their business strategy with pay, suggesting the alignment of pay with organizational
objectives can positively impact company performance.
GM’s failure to align compensation with the company’s objectives is partly to blame for its
massive layoffs in recent years.
Increasingly, compensation specialists are asking which components of the compensation
package (benefits, base pay, incentives, etc.), both separately and in combination, create value
for the organization and its employees. Managers are asking questions such as: “How will this
pay program help to retain and motivate valued employees?” and “Does the benefit or pay
practice affect the administrative cost?” Payments that fail to advance either the employee or
the organization are removed from the compensation program.Footnote It is not uncommon for
organizations to establish very specific goals for linking their organizational objectives to their
compensation program.Footnote Formalized compensation goals serve as guidelines for
managers to ensure
that wage and benefit policies achieve their intended purpose. The more common goals of a
strategic compensation policy include the following:
To reward employees’ past performancesFootnote
To remain competitive in the labor market
To maintain salary equity among employees
To mesh employees’ future performances with
organizational goals
To control the compensation budget
To attract new employees
To reduce unnecessary turnover
To achieve these goals, policies must be established to guide management in making
decisions. Formal statements of compensation policies typically include the following:
The rate of pay within the organization and whether it is to be above, below, or at the prevailing
market rate
The ability of the pay program to gain employee acceptance while motivating employees to
perform to the best of their abilities
The pay level at which employees may be recruited and the pay differential between new and
more senior employees
The intervals at which pay raises are to be granted and the extent to which merit and/or
seniority will influence the raises
The pay levels needed to facilitate the achievement of a sound financial position in relation to
the products or services offered.
Compensation Design—The Pay Mix
Say you get hired making $10 per hour. What most helps you determine if that is an appropriate
amount?
An employee may ask: “How is my pay determined?” In practice, a combination of internal and
external factors can influence, directly or indirectly, the rates at which employees are paid.
Through their interaction these factors constitute the pay mix, as shown in Figure 9.6 For
example, the area pay rate for administrative assistants might be $11.50 per hour. However,
one employer may elect to pay its administrative assistants $14.25 per hour because of their
excellent performance. The influence of government legislation on the pay mix will be discussed
later in the chapter.
9-3a
Internal Factors
The internal factors that influence pay rates are the organization’s compensation strategy, the
worth of a job, an employee’s relative worth in meeting job requirements, and an employer’s
ability to pay.
Compensation Strategy
Highlights in HRM 1 illustrates the compensation strategies of two organizations, Tri Star
Performance and Preventive Health Care. The pay strategy of Preventive Health Care is to be
an industry pay leader, while Tri Star Performance seeks to be pay competitive. Both employers
strive to promote a compensation policy that is internally fair.
Tri Star Performance and Preventive Health Care, like other employers, will establish numerous
compensation objectives that affect the pay employees receive. At a minimum, both large and
small employers should set pay policies reflecting
(1)the internal wage relationship among jobs and skill levels,
(2)the external competition, or an employer’s pay position relative to what competitors are
paying,
3)a policy of rewarding employee performance, and
(4)administrative decisions concerning elements of the pay system such as overtime premiums,
payment periods, and short-term or long-term incentives.
Worth of a Job
Organizations without a formal compensation program generally base the worth of jobs on the
subjective opinions of people familiar with the jobs. In such instances, pay rates may be
influenced heavily by the labor market or, in the case of unionized employers, by collective
bargaining. Organizations with formal compensation programs, however, are more likely to rely
on a system of job evaluation to aid in rate determination. (Note that this topic will be covered
later in the chapter under pay structure.) Even when rates are subject to collective bargaining,
job evaluation can assist the organization in maintaining some degree of control over its pay
structure.
The use of job evaluation is widespread in both the public and the private sector. The cities of
Chicago and Miami use job evaluation in establishing pay structures, as do Google, Goldman
Sachs, and GM. The jobs covered most frequently by job evaluation are clerical, technical, and
various blue-collar groups. Other jobs covered are managerial and top executive positions.
In today’s competitive environment, compensation professionals believe that the worth of a job
should be based on more than market prices or using only an internally driven job evaluation
program. Rather, a job’s value should be based on the total value delivered to the organization.
That is, some jobs may simply be more important to organizational success than others
regardless of how they are internally evaluated.Footnote Valuing work not only properly enables
organizations to price “important” jobs effectively but also provides insight into how a job relates
to the organization’s objectives. Additionally, valuing work properly serves to attract and retain
the right talent to drive organizational performance.
Employee’s Relative Worth
In both hourly and salary jobs, employee performance can be recognized and rewarded through
promotion and with various incentive systems. (The incentive systems used most often will be
discussed in Chapter 10.) Superior performance can also be rewarded by granting merit raises
on the basis of steps within a rate range established for a job class. If merit raises are to have
their intended value, however, they must be determined by an effective performance appraisal
system that differentiates between employees who deserve the raises and those who do not.
This system, moreover, must provide a visible and credible relationship between performance
and any raises received. Unfortunately, too many so-called merit systems provide for raises to
be granted automatically. As a result, employees tend to be rewarded more for merely being
present than for being productive on the job. Also, as previously noted, most increases may lack
motivational value to employees when organizational salary budgets are low.
Several factors should be taken into consideration when determining how much a worker like
this one should be paid
Highlights in HRM 1
Comparison of Compensation Strategies
Compensation strategies and objectives can differ widely across large and small employers as
well as across employers in the private and public sectors. Here are the compensation
strategies at Tri Star Performance and Preventive Health Care.
Tri Star Performance
Promote pay-for-performance practices
Pay market-competitive compensation
Achieve internal and external pay equity
Achieve simplicity in compensation programs
Strive for employee commitment and a collaborative work environment
Promote gender fairness in pay and benefits
Comply with all governmental compensation regulations
Minimize increased fixed costs
Preventive Health Care:
Be a pay leader in the health care industry
Promote open and understandable pay practices
Ensure fair employee treatment
Offer benefits promoting individual employee needs
Offer compensation rewarding employee creativity and achievements
Offer compensation to foster the strategic mission of the organization
Obtain employee input when developing compensation practices
Emphasize performance through variable pay and stock options
Employer’s Ability to Pay:
Pay levels are limited by earned profits and other financial resources available to employers.
This is clearly illustrated by financially burdened companies that ask their employees for pay
cuts. For example, small businesses are often most burdened by financial downturns and find
that their access to capital to pay employees is much more limited than their larger competitors.
Furthermore, an organization’s ability to pay is determined in part by the productivity of its
employees. This productivity is a result not only of their performance but of the amount of capital
the organization has invested in labor-saving equipment. Generally, increases in capital
investment reduce the number of employees required to perform the work and increase an
employer’s ability to provide higher pay for those it employs.
Economic conditions and competition faced by employers can also significantly affect the
rates they are able to pay. Competition and recessions can force prices down and reduce the
income from which compensation payments are derived. In such situations, employers have
little choice but to reduce wages and/or lay off employees or, even worse, to go out of business.
This is especially the case for small businesses. In a survey of more than 1,000 entrepreneurs,
35 percent of all small businesses in the United States had to make pay cuts and 23 percent
had to make valuable staff cuts.
9-3b
External Factors
The major external factors that influence pay rates include labor market conditions, area pay
rates, cost of living, collective bargaining if the employer is unionized, and legal requirements.
The legal requirements of compensation will be discussed later in the chapter.
Labor Market Conditions
The labor market reflects the forces of supply and demand for qualified labor within an area.
These forces help influence the pay rates required to recruit or retain competent employees. It
must be recognized, however, that counterforces can reduce the full impact of supply and
demand on the labor market. The economic power of unions, for example, may prevent
employers from lowering pay rates even when unemployment is high among union members.
Government regulations also may prevent an employer from paying at a market rate less than
an established minimum
Area Pay Rates
A formal pay structure should provide rates that are in line with those being paid by other
employers for comparable jobs within the area. Data pertaining to area pay rates may be
obtained from local wage surveys. For example, the Arizona Department of Economic Security
conducts an annual wage survey for both large and small employers in various cities throughout
the state. Wage survey data also may be obtained from a variety of sources, including the
American Management Association, Administrative Management Society, U.S. Department of
Labor, and Federal Reserve Banks. Smaller employers such as the Woodsmith Corporation and
Golden State Container use government surveys to establish rates of pay for new and senior
employees. Many organizations, such as the City of Atlanta, Northwest Airlines, and Progress
Energy, conduct their own surveys. Others engage in a cooperative exchange of wage
information or rely on various professional associations for these data. A high percentage of
wage data surveys are inexpensive—less than $100—and are therefore available to all
employers, regardless of size.
Wage surveys (discussed fully later in the chapter) serve the important function of providing
external pay equity between the surveying organization and other organizations competing for
labor in the surrounding labor market. Importantly, data from area wage surveys can be used to
prevent the rates for jobs from drifting too far above or below those of other employers in the
region. When rates rise above existing area levels, an employer’s labor costs may become
excessive. Conversely, if they drop too far below area levels, it may be difficult to recruit and
retain competent personnel. Wage survey data must also take into account indirect wages paid
in the form of benefits.
Small Business Application
Compensation for Small Businesses
As compensation is one of the biggest costs for small businesses, employees are often first to
be short-changed. At the same time, the old adage “you get what you pay for” holds true. The
ability to attract and retain talented employees depends largely on a company’s ability to offer
suitable compensation. For small businesses, what is considered suitable differs from that of
larger businesses.
Big business can woo job candidates by offering comprehensive compensation packages that
include stock options, consistent pay raises, security, and sometimes even a Starbucks in the
lobby. While small businesses cannot offer these things, they can offer more customized pay
packages to deal with employees’ individual needs. Footnote For example, not having a
complex and bureaucratic …
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