Compensation Decisions

Objective
Main objective of this assignment is to develop a compensation plan for the company evaluates the specific kind of job. This assignment consist a compensation plan for a specific post and we have to take some compensation decisions that are wise to develop appropriate compensatory plan.

Job analysis
Compensation plan is related to the salary or extra monetary benefits that have been provided to the employees. Here, we will consider some concept related to job analysis and evaluation of the JOB (Cullen, 2001).
Job analysis is evaluation of the required skills for a specific job. It also helps the management to know about the people those can perform this task in a proper manner (Chaskelson, 2000). Main purpose of job analysis is to understand the required skills for job. All the activities that are being performed for selecting candidates and making compensation plan for a specific job come under the job analysis.

Four Principles for Compensation Decisions
Principles have been developed for taking wise compensation decisions are as follows.
1. Secrecy is for the benefit of the employee, not the company
Company develops secrecy so that employees can be benefitted and they can be convinced privately to improve their skills for the achievement of the organizational objectives.
2. Subjectivity is a necessary evil
Most of the time company use subjective factors for developing compensation decisions that are not wise. Only quality for specific job should be considered, no subjective factor should be a part of compensation decisions (Kenneth et al ,2006).
3. Supply and demand still matter- Demand and supply of the specific skills in organization should also be considered for developing compensation plan and decisions. Sometimes specific skills are highly demanded in market and compensation should be developed according to the demanded skills.
4. Profit sharing is not inherently wrong-
If company is sharing its profit with the employees then it is also a good approach for developing compensation decision plan.

Below there is some information given about the people those are working different grade and their salary is also given. On the basis of that information, we will develop compensation decision.

Evaluation ratings are 1 = Needs Improvement to 5 = Exceeds Expectations
Salary Budget: $9,000 (It is assume that it is the maximum salary budget for higher grade employees and on the basis of given information salary will be decided)
Bonus Budget: $5,000
Company Designated Salary Pay Ranges

A2 = $12,750 – 17,000
A3 = 16,500 – 22,000
A4 = 21,000 – 28,000

INVESTMENT RISKS This section should address potentially negativ...