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The most beneficial ratio of internally consistent and market consistent compensation systems for James River Insurance CompanyThe most beneficial ratio of internally consistent and market consistent compensation systems for James River Insurance Company is 1:1.Many companies find it challenging when determining whether to lower compensation in an attempt to remain internally consistent, or to compensate higher to remain consistent and competitive in their market.Rather than choosing either/or, companies should strive to find a healthy balance.James River Insurance Company should compensate employees based on their capabilities financially, but also attempt to remain market competitive.Failure to find balance between the two can result in difficulties.A companywho disregards internal consistency and follows strictly market consistent systems, may end up
COMPENSATION PLAN OUTLINE4with inflated compensation costs and could possibly lose their competitive edge.However, a company who adopts strictly internally consistent systems may not be able to attract and retain talented, qualified employees.A balance between the two is vital.Evaluation of the current pay structure used by James River Insurance Company and assessment of employee contribution recognitionAsmentioned previously, employees of James River Insurance Company are paid on a salary basis, and receive pay twice a month.While some companies use traditional bases for pay that typically consider longevity and seniority when compensating employees, James River Insurance Company uses skilled-based and pay for knowledge compensation programs.Compensation and pay increases are based upon the skill of an employee and their performance, versus the amount of time that they have been with the company.The skill and performance of an employee is rated quarterly using a graphic rating scale as the performance rating method of choice, and pay increases are distributed annually.Along with a competitive base pay, employees are given a competitive benefits package, as mentioned earlier.The package is extremely competitive for the market and is successful in boosting employee motivation.In addition to cash compensation, employees are offered equity compensation.Simply defined, equity compensation is non-cash pay that represents ownership in a company, such as stock options (“Equity Compensation’, 2011).James River Insurance Company also shares its profits with employees though performance-based bonuses which are distributed within the first three months of each year.
COMPENSATION PLAN OUTLINE5Recognition of employee contributions is a big aspect of the James River culture.Along with annual pay increases based upon employee performance, employees, as a whole, are recognized every month the company exceeds their goals.Monthly goal celebrations typically involve company-wide lunches catered by surrounding restaurants.Appreciation can also come in the form of early releases or days where the office is closed entirely.