B- 5 Essay Questions Differences between Merit Pay and Incentives. Reason why an Organization Choose One or the Other The major difference between merit pay incentives and pay for performance is that merit pay focuses a lot on individuals performances of an individual, whereas, pay for performance is based is based on the performances of an individual. In addition, pay for performance programs at times includes merit pay incentives in some form. Secondly, merit pay incentives are always offered a reward to individuals while pay for performances are always long term plans involving an individual and an organization.
An organization might choose either merit pay or incentives because they both allow an organization to give it merits on individuals based on their performances rather than the entire performance of an organization. This motivates employees to be productive and loyal to their organization as they know that their efforts will be rewarded accordingly(Armstrong & Cummins, 2008). Describe the Process of Formulating a Compensation Strategy The process of formulating a compensations strategy is as follows. One must define the goals of the compensation. This is because the sole purpose of compensation is to reinforce the goals and objectives which a business has defined and it must take into consideration the type of leadership present in the organization (Armstrong & Cummins, 2008).
Secondly, one should take into consideration the organizational structure in place within an organization. This is because by writing down a good job structure, the company gives their employees a tangible job security hence enhancing productivity within the organization. Thirdly, the company should have a desired aggressive spot for the compensation.
This assists the organization in selecting the types of talents they want and ways of attracting these talents from their employees. Fourthly, one should consider the pay elements in rewards package. This will help them to differentiate themselves from other companies thus being able to accurately determine the pay amount they offer to their employees. Fifthly, an individual is also required to determine the performance management when formulating a compensation strategy. This turns out to be a success when the goals and processes of a business are correctly formulated. Sixthly, one is also required to determine the compensation systems and administration working within an organization.
This has positive impact on employee pay and providing decision support to those in different positions and department heads within an organization. Lastly, it is important for one to determine the gap existing in corporate strategy. This widely assists in controlling the gap that would have existed in the different factors that makes up the whole functioning of an organization (Armstrong & Cummins, 2008). Identify and Describe the Different Perspectives of Job Evaluation There are different perspectives existing of job evaluation.
Firstly, is that which a clearly defined and identifiable job must exist for the job evaluation process occur. This is to earn the trust of employees and they have to be defined in the agreed job description between an organization and an employee. Secondly, is that available jobs being offered to employees and the public by an organization must be properly evaluated by the job evaluation scheme set up by an organization. Thirdly, the acceptability of the jobs by the participants should determine the job test offered by an organization to prospective employees (Armstrong & Cummins, 2008).
Lastly, job evaluation should be based on finding individuals to occupy the empty positions within the organization and not to select particular kinds of individuals for the positions. Those being evaluated and selected for various positions in an organization should be qualified to occupy those positions and they should not be selected based on their personality or connections for the positions (Armstrong & Cummins, 2008). Circumstances Where One Would You Recommend A Skill-Based Approach? A Competency-Based Approach Skill based approach can be recommended when the job description requires an individual to learn new job description and the skills required to occupy the positions are things which are taught by touching and seeing.
An example is a scenario where an organization requires an individual who fixes the bolts within the organization. One can be easily taught how to bolt and unbolt nuts by physical training, contrary, competency based approach is required when in depth knowledge about a particular skill is required. Organizations may employ engineers who have the competency in the field to tie the nuts and bolts of machines in particular ways or manner.
Compare And Contrast The Arguments Associated With The “Best Fit” And “Best Practices” Concepts As They Relate To Compensation. Both best fit and best practices are both applied in the reward system by an organization. It is a common belief that best fit practice is meant to support the organization’s business strategy whereas, best practice advocates for human resource policies which are key to motivating employees of an organization to deliver in their respective fields (Armstrong & Cummins, 2008). References Armstrong, M., & Cummins, A.
(2008). Valuing roles: How to establish relative worth. London: Kogan Page.