Human Resource Essay

Introduction

A compensation strategy is a vital factor to consider in human resource management when setting the base pay of mid-level managers. The compensation package includes direct and indirect benefits, paid time off, salaries, promotions and other rewards. All employment levels demand compensation for the job done, meaning the management must develop an effective compensation strategy aligning with the budget to improve worker quality while managing costs. A mid-level manager has the experience and top talent calling for excellent compensation to retain, hire or attract individuals with expert skills and knowledge. Mid-level managers are the link between employees and the chief executive officers (CEOs), where good pay allows them to enhance organizational competitiveness. Although compensation is mainly the base pay, it may take various forms for a mid-level manager, including flexible schedules, paid time off, overtime pay, commission and bonus. Compensation strategies are crucial in ensuring company goals are attained, improving the selection, recruitment and hiring process, allowing better budget management and fostering corporate equity. The new compensation strategy for a mid-level manager in this paper will incorporate how equal employment opportunity laws impact the organization’s compensation strategy, merits and demerits of pay-for-performance and competency-based pay, motivational theories and development of a multi-generational compensation package, proposed compensation package (direct and indirect benefits) and how to assess the effectiveness of the compensation strategy a year from now.

How equal employment opportunity laws impact the organization’s compensation strategy

The corporate organizational strategy is primarily influenced by equal employment opportunity laws that seek fair base pay and salary offers for workers. According to the United States Equal Employment Opportunity Commission (2023), employment remuneration is mandatory without discrimination. It includes benefits, travel expenses reimbursement, hotel accommodations, gasoline and cleaning allowances, vacation and holiday pay, life insurance, bonus plans and profit sharing, stock options, overtime pay and competitive salaries. There are various factors to be considered in the compensation strategy per the equal pay act like skills, effort and responsibility. Therefore, the organizational compensation strategy will be affected by the skills possessed by the mid-level manager, such as training, education, ability and experience. A mid-level manager is considerably someone with experience who has previously worked in leadership positions. Glassdoor (2023) asserts that the mid-level manager’s career path experience exceeds five years, with 70% of mid-level managers having 5 to 7 years of experience and 30% having more than eight years. Besides, the expectation is for the individual to have undergone various educational levels and attained master’s, doctorate and other relevant degree programs. Some typical qualifications include having a bachelor’s degree in engineering, computer science and business (Gjerde & Alvesson, 2020). Such means the compensation strategy must be high to befit the educational attainment of the mid-level manager.

More so, equal opportunity laws demand the compensation strategy to align with an employee’s duties, responsibilities and efforts. A mid-level manager is the epicentre of decision-making at any organizational level, meaning he exerts substantial mental and physical aspects required to conduct a given task productively. In many cases, the mid-level manager will be required to solve internal organizational conflicts and work extra hours to allow him to meet deadlines demanded by the CEO. The middle management acts as a liaison between the low-level workers and the executive level, where they are tasked with implementing the vision carried out by the top management. Other critical responsibilities affecting the compensation strategy per equal pay law include developing and hiring team members, complying with organizational legal and ethical standards, assisting in paperwork and reports completion, enforcing work rules, procedures and policies, and managing employees on every shift.

Merits and demerits of pay-for-performance and competency-based pay

Performance pay is a remuneration strategy where employees are compensated depending on the task done and their performance. In this regard, productivity is key because it denotes one’s performance while aligning with the corporate objectives. Human resource management gives monetary and non-monetary incentives once the product exceeds expectations triggering high performance and excellent results (Counte et al., 2019). A key merit of pay for performance is boosting productivity and morale towards attaining the set goals and objectives while aiming at the reward. Upon exceeding organizational expectations, many employees are not rewarded, making their morale decline with no drive towards improved performance. Paying for performance makes the employees align themselves with corporate goals and the vision that enhances organizational success. Therefore, pay for performance benefits the employee and employer because everyone is motivated to be productive and incentive. The employer gains by retaining and attracting the best talent who likes the idea of better rewards and opportunities. However, pay for compensation may cause internal workplace conflicts because some employees may consider it discriminative. For instance, one employee may perceive the task as exceeding expectations only for another to be highly rewarded. Such creates a lack of cooperation, rivalry and a bad environment that may damage the corporate image. Besides, since everyone aims at the price, insane competition can compromise teamwork and collaboration. Thus, paying for compensation can overshadow vital organizational objectives while making it challenging to measure performance objectively.

On the contrary, competency-based pay gives remuneration based on the worker’s experience, knowledge and skill set (Onuorah & Okeke, 2023). Thus, it does not consider the job position or title but allows one to earn highly with high experience and improved skills. This creates self-motivation to achieve more by sourcing newer means of contributing to the firm while improving skills. Besides, the system indicates increased transparency because workers know they are compensated based on their experience and skills. The skill and experience structure reduces employee turnover rates because workers feel their input over time is getting rewarded. However, greater pay subjectivity may be imminent because the paid value must coincide with skills and experience. Also, some workers may cite unfair treatment because they are not highly rewarded like their experienced counterparts. Thus, the organization may need to assess the skills necessary for corporate productivity. For the mid-level manager position, I would recommend competency-based pay because of the many years of educational attainment and experience undergone by the candidate. Human resource management can shift to pay for performance years later to enhance productiveness.

Motivational theories and development of a multi-generational compensation package

The first motivational theory is Maslow’s hierarchy of needs which peaks with self-actualization after gaining esteem, belonging, safety and physiological needs. According to Xiao et al. (2019), esteem and actualization need to climax with the need by an individual to gain respect, status and recognition by becoming the best. The second motivational theory is the achievement-motivation model articulates the desire for affiliation, power and attainment while feeling loved and accepted (Xiao et al., 2019). Besides, Frederick Hertzberg’s theory integrates hygiene factors like social and security needs while articulating motivators like job enrichment, achievement recognition, career advancement and growth, responsibility, interpersonal relations, working conditions and salary (Xiao et al., 2019). Thus, when developing indirect for a multi-generational compensation package, it is important to consider recognition, bonuses, insurance covers, training and development, and paid time off. Such reward mechanisms impact various worker generations by boosting morale and increasing productivity, which generates corporate success.

Proposed compensation package: direct and indirect benefits

The direct benefits will include salary as the pay package. Indirect benefits may include commissions, paid time off, leaves, vacations, bonuses, recognition, promotion, training and development. Such affects hiring and retention by attracting top talent while retaining loyal and productive workers. The mid-level manager can be paid $90,684 annually with compensation compared to state and federal minimum wage of $69,000 to $155,000 range (Glassdoor, 2023).

How to assess the effectiveness of the compensation strategy a year from now

The compensation strategy requires an annual review to determine its success or gaps. The evaluation can be based on company goals by considering whether they were achieved as per the organizational alignment. Another assessment strategy is gauging turnover in the whole organization, particular positions or departments. One can also assess the compensation strategy by comparing it to the competitors and the success attained. Besides, the human resource can assess how the compensation package has met employee needs to boost morale, productivity and performance.

Conclusion

From the preceding, a compensation strategy is vital when attracting and retaining top talent. Various laws influence how the compensation strategy should be capped to ensure the minimum wage is observed while fulfilling employee rights. The compensation strategy can be performance-driven or based on competency. The mid-level manager position could incorporate competency-based pay because of the educational attainment and experience level. The compensation package can be achieved as direct benefits through a base pay aligning with federal remuneration and other indirect benefits like recognition, praise, paid time off, bonuses, commission, paid vacations and promotions. The strategy can be assessed annually by comparing the company with competitors, analyzing turnover and whether it has met employee needs.

Appendix

References

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Gjerde, S., & Alvesson, M. (2020). Sandwiched: Exploring the role and identity of middle managers in the genuine middle. Human Relations, 73(1), 124-151. https://journals.sagepub.com/doi/pdf/10.1177/0018726718823243

Glassdoor (2023). Mid-level manager overview. What does a Mid-Level Manager do? Role & Responsibilities | Glassdoor

Onuorah, A. N., & Okeke, N. C. (2023). COMPENSATION MANAGEMENT: A TOOL FOR ORGANIZATIONAL GROWTH AND EMPLOYEE PERFORMANCE. Advance Journal of Management and Social Sciences, 7(2). https://aspjournals.org/Journals/index.php/ajmss/article/download/295/292

United States Equal Employment Opportunity Commission (2023). Facts about equal pay and compensation discrimination. Facts About Equal Pay and Compensation Discrimination | U.S. Equal Employment Opportunity Commission (eeoc.gov)

Xiao, B. A. K. Z., & Darko, P. A. (2019). Motivational Packages and Its Effects on Employee’s Performance: A Case of Ghanaian Organizations. (PDF) Motivational Packages and Its Effects on Employee’s Performance: A Case of Ghanaian Organizations (researchgate.net)