Strategic Pay Mix Design- Tailoring Compensation Structures to Job Families

Strategic Pay Mix Design- Tailoring Compensation Structures to Job Families

Pay Mix

A pay mix is a ratio in which a company distributes its compensation components. The pay mix is mostly influenced by the company’s strategic goals, job content, and the company’s development stage. A company may want to create a sense of “hard work rewarded” by increasing incentives more than the base salary. On the other hand, they may decide to create a sense of security by offering a higher base pay than incentives.  For both cases, the pay mix is different. A good pay mix goes a long way in motivating employees and increasing productivity (Campion &Campion, 2017)

Pay Mix Under Different Job Families

Operations

The operations family jobs are in a higher pay range. A higher fixed salary that is less aggressive to the variable pay will be well suited since the job is not highly influenced by its personnel aggressiveness. Due to the higher base salary, volatility will only result in high variable pay, which may not be sustainable for the company. The team, however, needs to be motivated to achieve the company’s goal. Long-term incentives come in handy as they aid in maintaining customer satisfaction and retention.

Production

The production function plays a role in new customer acquisition and retention. Regular incentives and benefits will go a long way in boosting morale and overall performance. Only then will the company avail top quality products as per its goal.

Office Support

The employees in office support help in the administrative duties of a company. Provision of benefits and long-term incentives to them aid in their overall performance and providing a sense of loyalty. More so, they will uphold continuous improvement as per the company’s goal.

Human Resources

Human resource is often a bridge between management and employees. The pay range in this family is high. Benefits such as employee training and insurance policies are good motivators for the HR family. Besides being a favorable cost, the cost can be considered as an investment as it propels the team to ensure the company’s goals are met (Lozano & Sanchez, 2020).

Employee Benefits

Besides the regular base pay, a company will introduce benefits to motivate its employees to keep working hard. Some of these benefits include:

Insurance Policies and Retirement Plans – Employees will highly appreciate the provision of insurance, especially health, by their company. Insurances give a sense of care to their employees outside the work environment.

Performance Bonuses – Any employee will work harder if they know that their efforts might gain them some bonuses.

Employee Training – Training programs help employees improve themselves. Additionally, the company gains from the additional skills gained by the employees (Kumar &Siddika, 2017).

References

Campion, E. D., Campion, M. C., & Campion, M. A. (2017). Best practices in incentive compensation bonus administration based on research and professional advice. Compensation & Benefits Review, 49(3), 123-134.

Kumar, D., & Siddika, H. (2017). Benefits Of Training And Development Program On Employees’performance: A Study With Special Reference To Banking Sector In Bangladesh. International Journal of Research-Granthaalayah, 5(12), 77-88.

Lozano-Reina, G., & Sánchez-Marín, G. (2020). Say on pay and executive compensation: A systematic review and suggestions for developing the field. Human Resource Management Review, 30(2), 100683.

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The final version of your entire project is due at the end of this module. This version will include revisions based on instructor feedback on Milestones One and Two.

Note: The final project includes a new pay mix section below. This is not included in Milestones One and Two and must be completed before submission.

Pay Mix: A pay mix is a company’s relative distribution of compensation components such as base pay, merit, incentives, benefits, etc. (Gerhart & Newman, 2020). Different job grades may have different pay mixes. For example, executives often have a higher percentage of long-term incentives. Pay mixes are often illustrated in a pie chart. Below is an example of a pay mix pie chart. Note: The numbers used are not from the data in this case study.

A pay mix pie chart.

Create a pay mix for each job family, illustrated in a pie chart. Provide a rationale for each pay mix, connecting your decision to the company’s strategic goals. In addition, provide at least three examples of employee benefits you recommend the company propose in their total compensation package. Refer to the Add a Pie Chart resource in this module’s Reading and Resources section if you have not created a pie chart using Excel data.

To complete this assignment, read the Final Project Guidelines and Rubric document for detailed information on the requirements for this project.