Pay Structures, Pay & Merit Assignment Example | Topics and Well Written Essays - 500 words

Pay Structures, Pay & Merit - Assignment Example Executive compensation differs from sales or human resource personnel on the ground that executive compensation involves negotiation between the executive and the employer (Peter, 2002). Thus, it is negotiated and agreed on unlike other employees whose compensations are spelt out in advance. Executive offer letter is more detailed comprising a variety of options such as housing agreements, bonuses, incentives, guaranteed service pack in case of termination of employment, and income protection guarantees in the event of sale or other liquidity event resulting to change in the company administration. All these benefits and variety of options are not available to other employees. Offering of more lucrative salary to executives is made in a bid to attract, motivate, and retain executive officers who have the capability of leading and managing business successfully, link an organization cash incentives with measurable performance align their interests with the company’s’ interests to achieve long-term goals. This has contradicting effects on low paid employees. In some instances, it motivates them to work hard and acquire the executives in order to receive such compensation in future. In other situations, low paid employees are demotivated, arguing that they are the ones who do most of the work, but executives ends up receiving more compensation than them (Worldatwork, 2007). During survival mode, reduction of staff compensation strategy may be preventing layoffs, but an organization may end up losing its top talent. As a human resource manager, I would adopt a pay-for-performance strategy. In implementing this strategy, I would let them be aware that each of them will be compensated with the same amount of monetary value he or she will create for the company, with little basic salary as benchmark. For top management, I will make them realize that their success is counted on how the organization successfully attains its goals (Peter, 2002).