7.1 The Issue of Equal Pay or Comparable Worth
One of the important compensation issues of the twenty-first century is equal pay for comparable work. The issue stems from the fact that jobs performed pre-dominantly by women receiving less pay for jobs that are different from, but comparably worth to, those performed by men. The issue of comparable worth goes beyond providing equal pay for jobs that involve the same duties for women as for men. It is not only concerned with whether a female secretary should receive the same pay a male secretary. Rather the argument for comparable worth is that jobs held by women should be compensated the same as those held by men, if both job types contributes equally to organizational success. However, this is continuing problem and will continue be an active issue as the percentage of women in the workforce continues to climb.
7.2 Two Tier Pay
Two-tier pay rates are recent innovation as businesses attempt to cut their labor costs. There are actually two different pay systems for the employees. Some plans continue this difference for long time periods and others set a limit – such 90 days or longer before they become equal.
7.3 Fair and Square
What can HRM professionals do to make their compensation program achieve wage parity while avoiding federal scrutiny for a defective gender-neutral system? Although employee’s use different techniques to keep salaries fair and square, equitable compensations have several common features such as salaries based primarily on the industry market pay rates, not on some
employee’s value to the firm based on an arbitrary evaluation system.
Another common feature is system in which skills, performance, and tenure are objectively evaluated and measured. This allows HRM to monitor the process and control adherence to the approved procedures. The results should be accepted as not deviating from the process. The last common feature of a gender-neutral compensation system is a regular review for any irregularities caused by cutbacks, transfers, mergers, or sudden increases in recruiting. When irregularities are uncovered, they are immediately corrected.
The corners of all companies fair and square compensation system requires continuous adjustments. The gender system goal is to be able to highlight any unfair treatment for all employees, even between two white male employees.
7.4 Variable Pay
The twenty-first century is witnessing the hottest trends in HRM. It is the redesign of compensation, packages to support organizational goals and objectives. This is the result of helter skelter compensation plans with not coherence policies. The answer to these problems is the total compensation plan. In such a plan, employees receive a base pay for core duties, individual and small group achievement pay, and variable pay that is based on the company’s success.
Total compensation plans are not uniformly successful. The reason is poor implementation of the variable pay segment of the plan. The correct implementation requires careful attainable performance goals and techniques to objectively measure those goals. This requires knowledge of the company’s rent performance results in key areas and comparative industry data. The variable pay program success requires establishing employee’s trust. If employees don’t trust their management to tell them the truth or fairly considered their suggestions without ridicule or punishment, variable any programs will not work. To make variable pay work, companies should do the following:-
- Do not make the program complicated. Goals must clear and straightforward. One way to accomplish is follow the example of a major national food manufacture. Employees were asked to set specific variable pay goals for each plant. Representative group developed very specific goals for manufacturing have the final approval employees were told the implementation would be immediate.
- Never underestimate the ability of employee to understand. They are at least as sharp as the managers who created the original compensation program. When the subject is pay-related, they listen carefully and are away of inequities, which will then share with other employees.
- Avoid compensation legal terms and unnecessary details. All employee communications containing excessive financial and legal terms are very ineffective. A more effective method is quarterly posters to update employees on the two main goals of variable pay; operating margins and customer satisfaction. An effective poster tells what is needed and is understood in seconds.
- Management must acknowledge present deficiencies in the current compensation plan. The current deficiencies are the reason for implementing variable plan. The real success is whether margins and customer satisfaction improves as a result of employee recommending improvement strategies.
- The variable pay program is whether the employees perceive it a being fair and equitable. The employees must buy-it that the variable pay plan is in their and the company’s best interest.
