Question

500 WORDS MINIMUM!!

a) Define Pay Structure. Discuss why pay structure is an essential component of compensation management?

b) What benefits do an effective pay structure provide to an organization? What negative consequences may result from the implementation of an ineffective pay structure?

c) Describe the steps one should take to implement a successful pay structure in his or her organization?

Answer 1

(a) Pay Structure

means the Total salary of an employee which is made up of various components.. Bascially the total salary of an employee included

• Gross Salary
• Allownances
• Prequisites
• Deductions / Taxes
• Net salary

Pay structure is an essential component of compensation management because the workers , the employees working in an organisation gets paid for the services they give in the organisation , the pay they get is actually their source of income . The compensation management provides pay to their employees after adding or deducting their allownances , perquisites . and tax which they pay to the government for the development of their countries. Pay structure is also important as the employees are motivated in the form of allownances , bonus , which is added up to their salaries.

(b)  benefits do an effective pay structure provide to an organization are-

• Motivation : An effective pay structure provides motivation to the employees which results in the inceasing the performace of the employees and reducing the turnover.
• Maintenance of equity ; An effective pay structure results in maintaing the equity amongst the employees which results in reducing the conflicts.
• Growth : An effective pay structure also results in the growth of the organisation and leads to earning of more profits.

negative consequences may result from the implementation of an ineffective pay structure are

• High rate of turnovers : Turnover means leaving the job by the employees and shifting to another places. so if the pay structure would be ineffective , more and more employees will leave the organisation.
• Strikes: Sometimes due to inffective pay structure employees goes into strikes which can leads to losses.
• Reducing Goodwill : The ineffective pay structure also leads to falling of the goodwill maintained by the organisations.. Employees might hesitate working in the organisation.
• No devotion : Ineffective pay structure leads to dropping of the morale of the employees hence they wouldn't work with devotion.

(c) Steps one should take to implement a successful pay structure in his or her organization are-

• Communication : A proper communication with the organisation staff can help in building up the successful pay structure by comparing the market knowing the statistics etc
• Building the pay structure : Pay structure can be build by knowing the market position , competitors present in the market , policies etc.
• Measuring the market position : The organisation has to carefully measure its position in the market , the pay structure can be decided , changed according to the market position .
• Benchmarks : Benchmarks means the basic roles which an organisation should always have like a manager , an accountant , a legal adviser , workers , clerks etc.. the organisation has to calculate the average of all the benchmarks and then accordingly decide their pay depending upon their job positiond.
• Deciding the pay scale : The organisation has to decide the pay scale on which a worker has to be paid.

with the apporoval of the higher authorities and the managemt a pay structure is created and tf the management can also make changes in the pay structure.