Compensation Philosophy and Market Influences and Value of Surveys

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When it comes to Maersk’s strategic talent management initiatives, specifically related to compensation, they leveraged their people strategy sessions (PSS) when building their structure. As a reminder, this is the process they went through in order to identify their top 120 positions, and of these positions, which they deemed to be most critical to the least impactful. For senior level compensation, their individual PSS rating determined bonus eligibility. In addition, they also looked at personal, team and business unit performance. Top performers were eligible for the maximum pay out. Those who met expectations were eligible to receive 50% of the maximum pay out and lower performing individuals were only eligible for a maximum of 25% (Groysberg Abbott, 2013). These type of pay for performance systems are popular because it allows the employee to have more control over their potential compensation often leading to higher productivity, which is a benefit to the company as well. Typically, people are more productive if they know it can result in more money. Something to consider with this type of program is if market conditions are poor, or a company is not doing well, there may not be enough money in the budget to differentiate your higher performing employees. This can result in every employee receiving the same adjustment, for example cost of living increases only. If this should happen and the company also has a bonus pool, this is where they should implement the pay for performance philosophy.

Value of Salary Surveys

The wage and salary survey is a survey of the wages paid by employers in an organization’s relevant labor market-local, regional, or national- depending on the job (SHRM, 2015). These types of surveys can also look at and compare wages across divisions, different roles or even geographical territories, just to name a few examples. It’s important for an organization to utilize these types of surveys so that they can remain relevant and competitive in the marketplace. If not, employees may leave and go to companies who are paying higher salaries for what the employee considers a comparable job. Of course, if that is the case, the employee should consider the overall package, including discretionary benefits before accepting any new job offer and not just look at the salary. Even though these surveys are generally used to get competitive data on wages, companies can also get information and data on other employer benefits and best practices. Knowing the full picture allows both the employer and employee to make well educated decisions that best support the strategic direction of the organization as well as the individual’s needs.

Discretionary Benefits Advantages

When looking at Maersk’s case study, or any organization for that matter, as mentioned above, it’s important to understand the big picture. A large part of that picture, in addition to salary, are discretionary benefits. Discretionary employee benefits include benefits the law does not require the employer to offer (Martin, 2019). For example, costs related to mental health, life insurance, 401k plans, tuition reimbursement or assisting with elderly and childcare expenses. As Maersk grew into a global organization and looked to make changes to their overall strategic approach, they also needed to look at and understand how to attract and retain the right people for the right positions. An employer who offers discretionary benefits not only builds positive relationships and the ability to retain existing employees, but it allows them to attract new employees who often bring with them new thoughts and ideas. In addition, employees who are both physically and mentally healthier, as a result of preventive health- care benefits, may work more productively (2019). Because Maersk is a global organization, they will need to look across the globe to ensure they are offering discretionary benefits that appeal to the local markets for which they are hiring. And of course, as the company continues to change and the world around them, these types of benefits may also need to change.

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Compensation Philosophy and Market Influences and Value of Surveys. (2020, December 14). WritingBros. Retrieved September 19, 2021, from https://writingbros.com/essay-examples/compensation-philosophy-and-market-influences-and-value-of-surveys/
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Compensation Philosophy and Market Influences and Value of Surveys [Internet]. WritingBros. 2020 Dec 14 [cited 2021 Sept 19]. Available from: https://writingbros.com/essay-examples/compensation-philosophy-and-market-influences-and-value-of-surveys/
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