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Pay for experience and advancement is a payment scheme used by the human resources (HR) department to reward employees depending on their skills and level of professional qualification (Gerhart, 2016). To effectively control an organization's pension programs, HR employees must consider the system's function and model. Since technology has enabled businesses to improve productivity by paying workers, the use of this method would save time and money when it is automated.
Significantly, the scheme credits employees for achieving specific career objectives, qualifications, and training in their area of study. Significantly, through the exercise, it provides a platform for workers to improve their education and expertise (Wilson, 2015). Notably, knowledge-based pay encourages employees to further their education and attain an increase in compensation and other benefits.
As employees’ scope of knowledge widens, they handle lucrative and complex assignments on behalf of the organization comfortably. Therefore, this system is a plan that provides rewards and bonuses toward the managerial, service, or professional workers for learning and mastering a specified skill (Wilson (2015). Particularly, the system is based on worker’s educational achievements in a company. Considerably, the combination of training and development functions of a human resource leads to employee's pay rise.
Fig 1. Pay Knowledge Model Used To Determine Compensation
Position Skill Requirement
Check the boxes below and
indicate if by ticking (√) if you
can perform the listed duty
Indicate by ticking (√) if you have the following skills
Department of Marketing
Director Of Marketing
Manages the marketing
and sales of
products and services
that meet customer needs
and will make a positive
contribution to the company’s
In conjunction with senior
management, establishes the
appropriate price guidelines
For company products and services.
Evaluates current marketing
strategy and recommends
new strategy to the executive
Committee when appropriate.
Prepares sales forecasts for
Each fiscal year.
Prepares a departmental budget.
Evaluates current policies, procedures
In conjunction with the Human Resources
Department, responsible for selection,
evaluation, and coaching of regional
managers and for ensuring that all sales
Staff receives proper training.
Liaises with other Department
Managers to ensure that overall
Corporate objectives are being accomplished.
Provides support to top management
in identifying strategic issues and
Trends are affecting the company.
Posses a university
Commerce or Business Administration degree
Master of Business
At least ten years
of experience in
with at minimum of
five years in management
Ability to develop
, supervise, and
Ability to handle conflict
Of interest in the
Organization. Surpass departmental duties.
Skills. Ability to solve
problem in the
Can cooperate with
managers in the same
the line in the organization.
Department of human resources
Director Of Human Resources
Ensure the acquisition, training,
retention, and motivation of
personnel needed by the
company to achieve its
Evaluates HR plan and
Recommendation of current
HR polices to the executive
Preparation of the budget in
and assesment of HR goup.
Evaluates current practices, procedures
Ensure compensation expenditures
Are effectively deployed in
Develop a suitable compensation
And reward strategy. Supervises
Implementation of approved
Polices and strategy.
Helping other departments
in navigating through HR
Problems and issues
Providing assistance to
senior officials in selecting
strategic problems and trends
affecting the company.
Degree (human resources).
Master of Business
Administration in human resources and Certified
Experience of ten
years in HR capacity
and a minimum of five years
in management and
And develop workers.
Handle conflict of
interest among workers. Surpass department performance.
Source: Gerhart (2016)
Recommendations about Managing Future Compensation Increases
Contemporary, companies are striving to manage dynamic changes in their compensation schemes. Barling (2014) asserts that gone are the days when firms used to give equal pay increases to all employees. Currently, modern organizations face many constraints in budgeting for workers’ benefits, compensations, and salary. Thus, they need an effective management system of their payments plans.
Other than the historic pay increase and variables of rewards, such as bonus, profit, and gain sharing, a company should plan. CORE Company should pay attention to the quality of work life rewards to manage future compensation increases effectively. Thus, when a group offers a variable pay rate of approximately six to eight percent in addition to the basic salary, the employees should post better performance (Long, 2014). In fact, the increase should motivate the workers to produce more.
Preferably, CORE Corporation should not reward all employees equally, but it should compensate them depending on their performance. According to Barling (2014), a better system does not reward all workers alike but pays staffs depending on their output. Therefore, the firm should use its structure as a communication tool to deliver a message about its expectations and goal achievement rewards. It should also develop a remuneration philosophy and direction in writing that the board of directors can contently review and deliberate with managers. By doing so, it will have harmonized its operations.
A reward philosophy suggests the pay rate for each employee. It gives 50th percentile for individuals attaining goals and 75th percentile for objectives that result in pay delivery (Long, 2014). Apparently, an organization should not focus much on increasing pay scale but emphasize more on spreading gains through bonuses that are goal oriented. Thus, goal attainment should be compensated alongside organizational and individual goal achievement to enhance teamwork.
In summary, the Pay for Knowledge and Increases is a remuneration system that considers the educational development of employees. In prevents equal payment of employees because each has a different degree of contribution to the productivity of the firm. The system then considers the relative increments in the educational skills of the workers before raising their basic pays by the specified percentiles. The departmental table in the figure 1 above explains the way this system works. Apparently, it is useful, and it saves costs and time.
Barling, J. (2014). Knowledge work in organizational behavior. International journal of management reviews, 2(3), 287-304.
Gerhart, B. (2016). An empirical analysis of a skill-based pay program and plant performance outcomes. Academy of management Journal, 41(1), 68-78.
Long, R.J. (2014).Strategic Compensation in Canada, fifth edition. Nelson, ISBN 978-0-17-650968-2.
Wilson, M.C. (2015). Human Resource Systems and Sustained Competitive Advantage: A Competency-Based Perspective. Academy of Management Review 19(4), 699–727.
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