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Look at compensation strategy internal alignment and

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Look at “Compensation strategy: internal alignment” and “Consequences of structures” in the prescribed book. Internal alignment , also called internal equity, recognises the relative value of various jobs within an organisation. The relationships form a pay structure that should support the organisation strategy, support the work flow and motivate behaviour toward organisation objectives. Internal alignment forms the basis of the pay structure by providing appropriate pay differentials to jobs of unequal worth. It recognises the differential value of the qualifications to perform different jobs and the conditions under which jobs are performed. Perceptions of internal alignment by employees will affect their motivation, their desire to remain with an organisation, and their interest in pursuing various HR activities, such as training and development. Pay structure refers to the array of pay rates for different work or skills within a single organisation. The number of levels, the differentials in pay between the levels, and the criteria used to determine those differences describe the structure. (a) Efficiency An aligned structure can lead to better organisation performance. If the structure does not motivate employees to help achieve the organisation’s objectives, then it is a candidate for redesign. Internal pay structures imply future returns. The size of the differential between the entry level in the structure and the highest level can encourage employees to remain with the organisation, increase their experience and training, cooperate with co- workers, and seek greater responsibility. (b) Fairness Departure from an acceptable wage structure will lead to turnover, grievances, and diminished motivation. However, there does not seem to be much agreement regarding “fairness” with regard to internal pay alignment. On the one hand there are writers that argue that if fair differentials amongst jobs are not paid, individuals may harbour ill will toward the employer, resist change, and so forth. Others, including labour unions, argue for only small differentials, in the belief that more egalitarian structures support cooperation and commitment and improve performance. (c) Compliance Internal pay structures should comply with the regulations as governed by law. The following factors are important in internal alignment: the organisation’s strategic intent, its design and work flow, human capital and the external conditions, regulations and customs it faces. Aligning the pay structure to fit the organisation’s conditions will more likely lead to competitive advantage for the organisation and a sense of fair treatment for employees. 3.4 Discuss the concept pay policy and discuss the different pay policy alternatives. ( 1
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