Assignment : Compensation Plan Outline
Worth 300 points
Using the same company you researched in Assignment 1, evaluate the company’s compensation plan to determine how it could be improved.
Write a six to eight (6-8) page paper in which you:
Evaluate the existing compensation plan to determine if it is the most appropriate for your company. Explain your rationale.
Determine the most beneficial ratio of internally consistent and market consistent compensation systems for the company you selected.
Evaluate the current pay structure used by your company and assess the recognition of employee contributions.
Make two (2) recommendations for improving the effectiveness of the discretionary benefits provided by the company you selected.
Evaluate the types of employer-sponsored retirement plans and health insurance programs provided by the company you selected and compare them to that company’s major competitors.
Use at least three (3) quality references. Note: Wikipedia and other websites do not qualify as academic resources.
TO BE RE-WRITTEN FROM THE SCRATCH
Compensation can be defined as all types of financial returns, benefits and tangible services an individual receives as part of an employment agreement or relationship (Milkovich, Newman and Gerhart, 2010). Non-financial and monetary compensation consist of the main factors of compensation which ultimately lead to retention. Leonard (2008) observe that compensation programs by organizations are measured in regard to the general pay effectiveness, employees’ contribution to organizational objectives, applied as recruitment tools as well as used as retention and motivational tool for employees. The main purpose of this essay is to evaluate and analyze the best practices in terms of compensation plans and benefits that are adopted by firms in the high tech industry, with a main focus on Microsoft Corporation. High tech organizations tend to incur high costs when it comes to recruitment and retention of human resources hence they are forced to come up with a design that is suitable for their compensation programs that are crucial to a firm’s bottom line. Microsoft, one of the pioneers in the tech industry, was founded by Bill Gates in 1975 with a main focus of selling a BASIC programming language version (Microsoft, 2018). The organization is one of the leading technology giants as well as the leader in the software market, which makes their compensation strategy to be one of the bottom lines for the organization.
Microsoft Compensation Strategy
According to the Microsoft website in 2018, the organization main focus is empowering their employees by bringing the best in them through supporting their objectives and goals as well as enabling the employees to find a purpose in what they do. Thus, the organization has designed Compensation and Benefits plan, which is managed by a third party, Global HR Operating Team, and their main aim, is to ensure that the needs of the employees are catered for from the various Microsoft subsidiaries across the globe (Singh, 2016). Microsoft, being one of the fortune 500 firms, practices best fit strategy due to the fact that the organization has a high number of engineers and scientists, high expenditures especially on research and development, rapid technical innovation, geographic concentration very limited market for high tech engineers, which makes the attraction rates to be high thus the adaptation of a compensation plan that best fit the organizations’ activities.
The compensation strategies for Microsoft are seen to have evolved especially over the last two decade. Before the year 2000, most of the portion of the pay packages for the organization consisted of stock options, although after the dotcom crash, Microsoft decided to graduate from the idea of stock options to a combination that entails merit pay rises, bonuses that are given annually as well as restricted stock units (Microsoft, 2018). Nevertheless, most managers in Microsoft considered this approach to be very cumbersome thus contributing to the organization adopting an integrated system, which clearly connect the rewards based on performance. The Microsoft compensation integrated approach entailed performance reviews of the employees where they received ratings from their immediate managers based on the achievements of the set goals, good behaviors with peers and managers as well as long-term performance records. These ratings enable the…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….. existing compensation plan
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