Evaluate the concept of market competitiveness in relation to an organization’s pay system, particularly when it is unable to offer its employees market competitive salaries due to a lack of financial resources. Propose at least three alternative approaches for organizations which have limited financial resources. Identify at least three specific steps that could be taken to minimize the impact implementing these alternative approaches could have on the firm’s success. Justify why these steps would be the most appropriate in this situation.
Globally, major firms and companies strive for success within individual spheres by seeking to attain a high level of market competitiveness. One of the most common strategies applied to this end is the novel compensation pay system, now common among major firms and corporations as they endeavor to make cumulative gains while benefitting employees. The inadequacy of resources is a common problem that firms need to anticipate and may result in a firm’s inability to offer a market competitive pay to employees. It is, therefore, essential to explore additional avenues for resources, alternative approaches to adopt when plagued by inadequate resources, and necessary steps to take to mitigate effects occasioned by the aforementioned strategies.
The concept of market competitiveness in a financially constrained organization
An organization with limited financial resources always has to contend with a myriad of issues related to compensation benefits for its employees. The primary reason why this area takes precedence is the integral nature of employee satisfaction; especially since it is directly linked to loyalty and high levels of productivity. Coupled with other crucial factors such as an ideal workplace environment, prevailing conditions, pay rates, and opportunities for advance within ones career, competitive pay rates now serve as a major incentive to improving employee output within an organization. Competitive pay systems rely solely on the incorporation of a job structure, strategic analysis, compensation surveys, and pay polices (Martocchio, 2017). As a set of procedures, competitive pay rates also seek to appeal to some of the most talented professionals within the market while still endeavoring to boost employee retention rates.
Organizations which seek to integrate a competitive pay system must first make certain that they conduct an in-depth evaluation of internal and external market factors. They should first ensure they gain an unblemished perspective of the profiles of competitors within the same industry in addition to outlining their growth prospects in the long haul. It is also fundamental to evaluate financial conditions which may ultimately play a major role in the determination of a competitive pay structure for the organization. Furthermore, compensation surveys are ideal within this particular system. Wages and salaries paid by competitors are systematically reviewed before the final determination of a viable practice to be amalgamated within an organization. Employee benefits, thus, become the main focus which then enables a company to incorporate a feasible pay structure given current market conditions.
An internal job structure further assimilates a regression analysis to develop the most appropriate remuneration practices within an organization. Pay polices, on the other hand, present an honest review of an organization’s current capabilities and strategies, which can be implemented to improve its competitive advantage within a market setting. Organizations in a high-functioning environment and with limited resources always have to make certain they improve their competitive advantage through a robust pay system. Merit pay, gain sharing, and equal distribution are some of the most common incentives currently in application when endeavoring to improve market competitiveness (Xanthopou et. al, 2015). Similarly, pay cuts should always be accompanied by an evaluation of payments made within the market before finally pivoting on the development of a new payment system. Competitive compensation packages have been known to attract employees to an organization while still serving as a cost-effective pay system.
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Although financial constraints present an overbearing challenge to most organizations, alternative approaches to this debacle do exist. The options available particularly aim to create a competitive pay system which is in par with other organizations within the same industry. Non-monetary incentives are also a crucial element to consider since they allow organizations to retain talented individuals capable of making a profound impact on the organization.
Cross-training is an alternative approach whose application is typically linked to high levels of motivation. The primary reason for its effectiveness is its ability to invest in capacity building while promoting efforts aimed at career development. Employees are, therefore, accorded a unique opportunity to hone skills and are soon eligible for promotion to a managerial post. Additionally, cross-training is associated with an overall reduction in costs by relying on the element of human resource to boost productivity.
As an alternative approach, flexible scheduling ensures employees benefit from pliable and suitable work hours which are departure from the norm. They are typically designed with the employee’s needs in mind, making certain that they benefit from this scheduling routine and are able to function well in a demanding environment. The result is increased morale and commitment to the tasks at hand which ultimately reduces the overall turnover rate. Moreover, higher profits are a cumulative benefit of flexible scheduling often attributed to an extension of operating hours.
Employee recognition and appreciation also introduces a host of benefits to workers within an organization. In particular, employees who are highly appreciated for their work within an organization record high levels of satisfaction and are motivated to attain set organizational goals. It is for this reason that managers are now keen on appreciating employees for the value they introduce to the organization while always remembering to recognize good work when the y see it.
Steps to alternative approaches
One of the most essential elements to consider when incorporating alternative approaches is effective communication. It is an invaluable step, especially since an alternative approach will only be fully accepted once employees gain a comprehension of its inner workings after clear correspondence. Clear and concise communication using a top-down approach is bound to increase employee motivation. The second step involves mitigating any adverse effects of the new payment system by conducting regular meetings with employees. This will allow them to gain a better understanding of the benefits and rewards in question to guarantee a smooth transition. The final approach will involve outlining the suitability of the approaches adopted. It is essential for employees to remain aware of the fact that an organization has their best interests at heart. This will bolster efforts to include a flexible work schedule since employees will become acutely aware of its pertinence.
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