Essay on "Historic Process by Which Strategic Compensation Arose"

Essay 20 pages (5396 words) Sources: 5 Style: APA

[EXCERPT] . . . .

historic process by which strategic compensation arose.

Strategic compensation strategies would be initiated by the sense amongst organizational decision-makers that financial incentives and hierarchical pay structures are not alone sufficient to explain that which motivates performance success and organizational commitment. In consideration of this subject, a history on the subject begins with Maslow's hierarchy of needs, which are reinforced by the commonly high priorities found amongst personnel in organizational settings. Specifically, Maslow cites such conditions as the need for self-actualization, for socialization and for personal security all as having a direct bearing on the ways people will tend to prioritize when making major life decisions such as where and how to work. Here, history would begin to demonstrate "the assumption that motivation comes from within and cannot be imposed." (Herbig et al., 563) This would begin to dissuade the view that financial compensation alone could be viewed as a way to maintain personnel effectiveness. From an historical perspective, this would mark an inflection point, with organizations increasingly coming to view compensation as a more nuanced subject, with a multitude of professional goals also coming into consideration.

1979 article by Harris et al. is illustrative of the historical pattern of observation emerging with regard to managerial theory and employee motivation. It is evident in the text of this article, which notes that financial incentives are often offered to organizational agents without full understanding of their roles, economic value to a company and the factors which might motivate them beyond money, that there is a developing understanding that there are socio-psychological ways to understand motivation. It begins to become apparent with such texts that managerial theory must overcome historical proclivities toward a fundamental misunderstanding of employee motivation. This is to say that the process by which strategic compensation would emerge would be concurrent with that by which organizational psychology and principles relating to organizational culture, performance evaluation and corporate ethics would come to the fore.

2. In what way are employees, line managers, executives, unions, and the government stakeholders of the compensation system?

The compensation system which is in place in a given organization will have a direct impact on all parties. The extent to which this system meets the needs, expectations and entitlements of members at different levels of the organization will be based upon the effectiveness by which all stakeholders are considered in its design. Certainly, employees are the most directly effected by the structure, as the stakeholder which is most dependent upon the compensation system for livelihood.

For the line manager, this dependency will also be true, but will also be magnified by a responsibility to ensure motivation and effectiveness amongst employees. A condition which itself is highly contingent upon satisfaction with the compensation system, the manager will find himself serving as conduit between those designing and those being impacted by the compensation system. Executives in an organization will view the compensation system as both a budgetary expense and a means to maintaining a balance of labor contentment and efficiency. On the other end of the spectrum, labor unions will view the compensation system as bargaining factor, with its incorporation of pay, benefits and rights protections often being shaped according to a compromise between executive and union wills. For government officials, the implications of satisfying political demands will result in the degree of interest and intervention selected and on whose behalf.

3. Which is a more important influence on compensation systems, national culture or organizational culture? Explain.

The difficult prospect of qualifying one of these as more valuable than the other is, in a manner, irrelevant. In truth, a compensation system cannot be designed without an acute awareness of both. However, some research does at least clarify the relationship between these factors and compensation. With respect to national culture, we find that there is indeed a set of preferences and expectations which will drive the nature of a compensation system. To the point, the thrust of this part of the discussion is driven by Hofstede's (1980) Dimensions of Culture, which denote that cultural differences do have a direct impact on the way that individuals relate to organizations and organizational goals. To this extent, Hofstede identifies Uncertainty Avoidance, Power Distance, Masculinity-Femininity and Individualism-Collectivism as the dimensions by which cultures and cultural organizational values tend to differentiate. (Hofstede, 12) it is Hofstede's argument that a compensation approach must be duly minded to meet the cultural expectations which encompass the lives of organizational members.

Of course, in an increasingly globalized economy, it is often the case that national cultures will be represented with diversity and nuance in any organization, particularly those whose operations tend to span the world community in terms of syndication, trade and expatriation of personnel. Therefore, we must look to organizational culture as the more relevant and unifying of the two concepts, driving expectations for a coalsence to more common and shared expectations that are governed by the nature of the company itself. Without implying that this is 'more important,' per se, it would still be useful to recognize that this will be the more definitive reference point for constructing a compensation system that aligns with organizational and individual needs in simultaneity. The discussion denotes, though, that we must execute this system with the nuance and conscientiousness of the manifold national cultures which can inform individual dispositions toward commitment, motivation and contentment.

4. Explain organizational and product life cycles, giving examples of products that are in each stage of the cycles.

Most organizations will undergo a series of phases from initiation to normalcy to decline which are, in many ways, a part of the organizational ebb and flow. The birth of an organization will typically be defined as a period of prospecting, establishing such key features as identity and market positioning. As this might apply to the product life cycle, a company such as Apple Computers is worth considering for the birth of its iPod and related MP3 Player technologies. Its birth would initiate a gradual period of public uptake.

The growth period of the life cycle is one in which the investment of capital helps to begin a period of massive expansion. From a product perspective, the iPod would undergo an incredible growth phase, with the intensification of its visibility in marketing context and in retail contexts coalescing into a full-fledged product success.

The period of maturity will define a time of stability, relative achievement of market position and some comfort in terms of the amount of capital which can then be reinvested into the company's sustaining of its position. With respect to a product like the iPod, the period of maturation into which it has already entered is one which has inclined innovation in terms of product variation and, simultaneously, the establishment of a marketing identity that is accurate and appealing.

An organization's decline, during a natural life-cycle, will typically begin when competitors and imitators have begun to fill the market with price and product differentiation. The may mean that competitors have either changed the price index on a product or have begun to innovate ahead of the curve defined by the initial organization in question. For the iPod, this period may be defined as that at which various MP3 player and downloading services had begun to flood the market, resulting in a decreased market share.

Death is not inevitable for an organization going through the life-cycle phases, but it is a prospect which can only be avoided through sensitivity to both internal and external factors. A failure to remain abreast of innovations or pricing changes occurring outside of an organization, or a failure to reinvest in continual innovation, growth or refinement of model will result in such a demise. Such is true for products which ultimately fail to remain in touch with market changes as well, with the iPod making such transitions as its focus on the iPhone a means of bypassing this danger.

5. Summarize how the Civil Rights Act of 1964, the Bennett Amendment, and Executive Order 11246 have affected compensation practice.

Among the most important of legislative moments in American history would be the passage of the Civil Rights Act of 1964, which would dictate that all individuals are entitled to equal treatment under the law, regardless or race, religion, gender and a host of other demographic distinctions. As this impacts compensation, its implication would be the beginning of a case demanding that compensation decisions be bound by a certain degree of lawful adherence to equality under personal and biographical terms.

By contrast, the strenuous debate over Civil Rights practicalities would allow for the insertion of the Bennett Amendment, which would provide a linguistically obfuscated justification for pay differential. Though this would be explained as a necessary protection for employers to establish comparative value in services provided to an organization, its impact would also be to create a tangled legal proscription by which individuals would have extreme difficulty in proving the presence of pay discrimination based on gender.

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