The company’s compensation decision-making process is guided by the compensation philosophy. It acts as a reference for organizing overall comp spend because it is founded on a set of concepts and values that are important to the company. The business will explain in its compensation philosophy the rationale behind the market objectives the company utilizes to determine pay scales (Armstrong & Mitchell, 2019). Although every firm has a different approach to this, they all strive to attract and hold onto the best employees, and their remuneration policies reflect this goal. The organization’s strategic vision, initiatives, operational goals, competitive outlook, and compensation and total reward plans are all supported by a sound compensation philosophy.
When Maersk noticed that its employee turnover was higher than usual, it decided to launch a rewards program. The bonus was determined by the performance of the group, the business unit, and the individual. Based on performance, they classified their staff into various groups; the greater your performance, the bigger your bonus; the lower your output or performance, the lower your bonus. This company’s commitment to rewarding performance and advancing the talent-management strategy was seen as having been reinforced by this annual bonus incentive. The wage rates offered to employees can vary depending on a variety of external circumstances including labor market conditions, local wage rates, cost of living, and collective bargaining if the employer is unionized.
Surveys are carried out every six months, a year, or every two years. Standard and custom surveys are typical types of the process. Custom surveys aim to address highly specific questions from a small number of peer companies. Every year, common surveys are frequently released and make an effort to include the same assortment of businesses and occupations (Armstrong & Mitchell, 2019). These extensive surveys are occasionally made available to members or clients of the survey sponsor or vendor as well as sold to non-participants. Data collection and survey production involve careful preparation and execution, financial and human resources, and time. Some businesses carry out internal surveys with the help of staff members and compensation specialists. However, the majority of businesses hire a third party to gather the data and perform the computations. The third-party strategy offers the degree of independence that the majority of participants desire. Some salary surveys are co-sponsored to increase participation and give the results more weight.
However, as soon as it is released, salary information ages or becomes outdated. To prevent antitrust issues, the Department of Justice automatically imposes a three-month delay (Armstrong & Mitchell, 2019). Moreover, a lot of effort is spent gathering and organizing the data before a survey is finished (Armstrong & Mitchell, 2019). Consequently, it is unavoidable to complete the salary analysis in a short period without direct intervention. However, this process is valuable for the management of employee expectations and allocation of appropriate reward and salary systems.
Benefits that are freely provided to employees by their company are referred to as discretionary benefits. They may be provided in various forms such as education assistance, transportation assistance, add-on healthcare benefits, and employee assistance programs (Armstrong & Mitchell, 2019). The fact that Maersk’s discretionary benefits are not required by law is an advantage. Benefits appear to be quite alluring to employees, and Maersk is capable of luring in and keeping the right candidates by constructing clear, performance-based objectives as well as a competitive benefits package. Offering benefits like healthcare, dentistry, vision, and a solid retirement plan could help them both recruit and keep the best employees.
Reference
Armstrong, S., & Mitchell, B. (2019). The Essential Hr Handbook: A quick and handy resource for any manager or HR professional (10th ed.). Career Press.