Question

In: Operations Management

Your company’s current pay structure was developed using the point-factor method in conjunction with market review...

Your company’s current pay structure was developed using the point-factor method in conjunction with market review data. Following the lead of other companies in the industry, however, your CEO proposes that she would like to overhaul the current pay structure by using market pricing exclusively. Recall from this chapter that market pricing refers to the process of basing a pay structure (almost) entirely off of competitors’ pay practices. The CEO declares that the overhauled pay structure will do a better job at attracting and retaining top talent, as pay will match or exceed that of competitors.

You are the vice president of HR at the company, and the CEO values your opinion on HR-related topics and issues. The CEO has asked you to evaluate her proposal and provide her with feedback.

Should the organization overhaul the current pay structure using market pricing? Evaluate this decision using the following criteria.

Please provide the rationale for your answer to each of the questions below.

Is market pricing legal, ethical, and fair?

Is it evidence based/evidence informed?

Does it foster healthy employee–employer relationships?

Is it time and cost effective?

Does it take a systematic stakeholder perspective?

Considering your analysis above, overall, do you think this would be an effective decision? Why or why not?

What, if anything, do you think should be done differently or considered to help make this decision more effective?

Expert Solution

· Absolutely. Market pricing is legal, ethical and fair because it ensures that the company and its competitors are all in the same pace thus avoiding any form of predatory pricing and pushing strong competitors from the market. Additionally, market pricing ensures that all the employees in the same grade across the industry are all paid fair and ethical compensation for their job roles and responsibilities. Finally, setting market pricing helps to benchmark the compensation and pay structure for the company for measuring the effectiveness and attract talents.

· Market pricing is evidence-informed because the standards set for the pay structure is based on the research that is available through other sources for reference. It is also pertinent to say that the research is tested and tried which means that the research data is accurate and time tested to suit all the organizations.

· Absolutely. Market pricing is time and cost effective because the research results are already available in the market and it is tested and tried. It saves time in conducting research and cost involved in it.

· Yes, it is a systematic stakeholder perspective because the stakeholders refer to the research that is already available online and ensures that they are time tested. It is not a single stakeholder’s opinion or suggestion. It is a systematic perspective of the stakeholders.

· Considering the analysis above, I think this would be an effective decision because the pay structure is based on time tested and true results. It is highly competitive to be in par with the industry standards thus making employees to be loyal and attracting top talents for the company. Since the research is evidence-informed, it saves a lot of time and cost in conducting research for the issue.

· I think that the one thing that should be done differently or considered to help make this decision more effective if the CEO is convinced that the market pricing pay structure is ethical and fair. Additionally, effective communication to all the stakeholders of the company regarding the overhauling of the pay structure would enable the decision to be effective. This removes the resistance to change too.

Note- If you like the answer, please provide an up-vote as it would be quite encouraging for me. Thank you.

keosha answered 2 months ago

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