Setting the Stage for Strategic Compensation and Bases for Pay Essay

Setting the Stage for Strategic pay and Bases for Pay - Essay ExampleHowever, it is important that compensation structures are aligned with the strategic objectives of the business. Three of the master(prenominal) goals of compensation departments in organizations are to attract talented personnel from the industry and help provide a certain amount of flexibility to the needs of the department improve morale of employees and motivate them to ensure the domain of an innovative and knowledgeable workforce as well as maintain salary standards which are rivalrous in the industry. Contextual influence posing greatest and least challenge for companies competitiveness Some of the external, as well as internal, conditions of a firm can regain the nature of pay structure which it would trope or which would be appropriate for it. Most importantly, the supply and demand of labour in the market would be a serious consideration while pattern its pay structure. Shortage of a particular exp ertness in the market might imply that the organization might charter to pay a higher(prenominal) price for those skills, and vice versa. In fact the demand and supply of labour in the market is the determining(prenominal) of the existing wage rates at that region too (Prakashan, 2009, p.14). The other very important federal agent which would pose serious challenge before an organization is the prevailing market rates. This can be too termed as the comparable wages or the ongoing wage rates. The compensation policy fixed by an organization must necessarily confirm to the wage rates paid by other competitors in the industry. Otherwise, it might result in employees leaving the organization getting attracted towards those with higher salary packages. The cost of subsisting also accounts for an important criterion based on which organizations develop their compensation structures and plans. It is crucial to make adjustments in pay depending on the increases or decreases in the cost of living index. When organizations fail to reset their salary structures agree to the changes in the living index, it can face resistance from employees and unions demanding higher wages. This could be challenging for the organizations (Prakashan, 2009, p.14). Apart from the in a higher place serious threats there are certain issues which are also crucial for determining compensation structures precisely which pose challenges before organizations to a lesser extent. The ability of an organization to pay or its affordability is crucial to determine its pay structure. Degree of profits, costs of production, sales revenues are some aspects which must be evaluated before designing pay structures. Psychological and sociological factors greatly determine the extent to which an employee would be willing to put in effort in his job. A persons psychological perception helps him equate his wage or salary levels as a measure of the extent of success he has earned. Lastly, rapid technologi cal developments have been the main cause of rapid development of skills of employees. The level of wages of these employees has also been changing correspondingly. Thus, it is important that organizations documentation track of changes in skill levels and wage level of