management compensation

Compensation Practices: Apple

Apple’s Compensation Strategy, Best Practices Applied, and Compensation-Related Challenges Faced

Various critical organizational processes are involved in the day-to-day operations of contemporary businesses. Without a doubt, an effectual compensation strategy ranks among such processes. Given the fact that today’s business environment tends to be marked by cutthroat competition for rivaling business entities that continue to come up with increasingly ingenious ideas aimed at outfoxing their rivals, it is of the utmost imperative that organizations develop an effective compensation strategy to afford themselves a competitive edge. What is more, an effective compensation plan is of equally of the essence for keeping hold of an organization’s most talented pool of workers. In addition, an effective compensation plan aids organizations to keep their operations along the lines of their budgets so that the most appropriate wages can be given to workers in accordance with their responsibilities.

Compensation systems can be categorized as either direct or indirect. On the one hand, direct compensation is a reference to the provision of financial reward for the performance of particular job roles. On the other hand, indirect compensation relates to the provision of benefits, perks, as well as discounts by a company (Fogliasso & Williams, 2014). All in all, the two types of compensation are of great value in the attraction of highly skilled workers to an organization. In essence, as long as an organization’s compensation plan is competitive and overall effective, it can generate a vast spectrum of benefits to the business. In this paper, compensation practices at Apple Inc., arguably the leading tech company in the entire globe these days, will form the principal focus of the paper.

As part of its practices, Apple Inc. never lays bare its compensation plans to the wider masses. Nevertheless, glimpses into the company’s activities with respect to compensation can still be attained based on reports as well as statements made by workers. Judging by reports and statements made by workers, it can be asserted that the organization underpays its pool of workers in comparison with the returns that it brings in every year (Davis, DeBode, & Ketchen, 2013). It has been affirmed that, on average, workers are afforded twenty-five thousand dollars a year. When one considers the fact that retail workers (who make the vaster proportion of employees at the company) at the corporation often generate, on average, nearly half a million dollars every year, the allegations of underpaying workers cannot get clearer. What is more, it has also been found that some of the organization’s workers (in particular, in China) operate for lengthy periods of time in unfriendly work setting (Sari, 2015)s. Given the fact the organization holds a significant share of the market and boasts one of the strongest brand names, it seems to have the ability to attract workers with relative ease.

Further, it has been ascertained that the pay offered by the corporation exceeds the minimum wage. On top of this Apple Inc. is known to provide appropriate benefits to its pool of workers, an opportunity to purchase the organization’s stock, discounted organizational products, as well as 401 (k) plans. Indeed, Apple’s commitment to improving conditions for employees has been acknowledged by various organizations continually push for the betterment if employment conditions as a whole (Davis, DeBode, & Ketchen, 2013). Despite such recognition, assertions of inappropriate employment practices, for instance, the compulsion of employees to work overtime continue to make rounds.

Additionally, the company’s best practices relate to its values that are enshrined in its pledge to conform to laws and regulations, being forthright in all of their undertakings, showing respect to its pool of workers, suppliers, customers, and other parties, as well as being confidential in each and every facet of its processes. One of the most important values that the company continues to uphold relates to the notion of not allowing reprisal (Davis, DeBode, & Ketchen, 2013). On top of this, the organization’s pool of workers is not afforded the freedom to assume duties outside the organization or employ inventions with the intention of benefiting other parties. Workers are also not given the freedom to employ valuable information attained from the corporation with the intention of purchasing or selling stock while they are also expected to notify the relevant parties within the organization in situations in which any given conflict of interest crops up. Moreover, discrimination on any form is not allowed at the organization. In a similar way, the company does not condone substance abuse at all.

What is more, an array of steps have been adopted at the organization with a view to seeing to it that the work setting, health, as well as safety of workers is protected, with this being unequivocally affirmed in the company’s policy with respect to workplace violence. In addition, the company usually encourage its pool of workers to make philanthropic donations (Fogliasso & Williams, 2014). All in all, the company tends to place consumers at the top of its plans, as it seeks to fully live up to their needs and wants as far as technological satisfaction goes. On a worrying note, the allegations of certain employees within the organization working in unsavory conditions with considerably lower pay certainly present serious concerns for the organization (Chhaochharia & Grinstein, 2012). As a result, the rate of worker turnover at the company has been said to be worrying, with many employees expressing their discontent with the compensation on offer at the organization. Interestingly, even though a significant sum of workers have elected to leave the organization in search of other opportunities, the company has shown the ability to retain and attract even more workers who are primary drawn to the organization due to its vast popularity.

One of the biggest challenges that the organization faces relates to the stained repute that continues to make waves throughout the globe (Sari, 2015). Since anecdotes started to swirl with respect to the organization’s approaches to compensation, a number of inquiries have been made to ascertain the validity of such assertions.

Impact to the Company and its Stakeholders

Overall, the company’s approaches have been found to have both positive and unsavory impacts on various stakeholders within the corporation and on the organization itself. First off, it has been illustrated that Apple Inc. offers its batch of software engineers (in addition to its cluster of senior managers) a massive remuneration package, which results in an elevated rate of retention (Davis, DeBode, & Ketchen, 2013). Given the fact that such persons play a monumental role in the organization’s innovativeness, their continued presence within the corporation has aided it in the development of improved inimitable products of high quality, hence affording it a noteworthy portion of the market. As a result, consumers have continually managed to lay their hands on products and services that live up to their typically lofty needs and wants.

Further, the organization likes to employ younger persons and usually shows little consideration for people within the middle age bracket or older ones. The company’s preference for younger individuals has greatly benefitted the organization owing to the fact that the majority of them tend to have limited familial obligations and usually exhibit greater willingness to be linked to the corporation even with reduced remuneration. Younger persons often perceive being associated with organization as a major plus, which makes them stick longer with the corporation. Due to this, the company has been able to hold on to its pool of highly skilled and talented young employees, which, predictably, translates into massive profits. In this way, the company and its stakeholders end up with a major win as a result of said strategy.

While the company’s approaches to compensation are clearly associated with various positives, certain negatives have also been ascertained from such strategies. Most prominently, the organization has been the recipient of a number of lawsuits that revolve around compensation issues (Fogliasso & Williams, 2014). Back in 2014, a number of workers sued the company over labor matters, in particular, asserting that the organizations refused rest periods and meal breaks. Apparently, the company wanted its workers to deliver numerous products that were demanded by customers without having sufficient rest. Apart from this, allegations of poor treatment of workers, for instance, in China, have been circulating for a long time (Sari, 2015). Overall, the emergence of such reports has undoubtedly stained the organization’s once clean image, which, at one point, led to the company recording a reduction in profit.

Labor Unions and Market Factors Impact on Apple’s Compensation Practices

Numerous allegations have been hurled at the organization with respect to its apparent contravention of laws surrounding labor. The greater majority of such accusations have emerged in the People’s Republic of China (Sari, 2015). Just to cite an instance, many Apple workers at a number of locations in China were found to have been compelled into working numerous hours more than what was specified. On a positive note, reports have emerged affirming that a great number of the corporation’s workers have seen an improvement in their remuneration packages since the cropping up of such issues (Chhaochharia & Grinstein, 2012). Succinctly, pressure from labor unions have been cited to have played a noteworthy role in influencing Apple to improve the organization’s working conditions as well as to come up with an improved remuneration system.

On the other hand, the most prominent market factor that has had an impact on the organization relates to the adoption of the total rewards approach to compensation. In the past, the compensation plan at the corporation seemed to be designed in a manner that set up a base remuneration for the majority of workers, which left top ranking senior managers to get the most pay and benefits. Nevertheless, transformations in the market have necessitated that the company embraces the total rewards approach, which allows workers to earn various benefits and incentives on top of their base pay.

Effectiveness of Traditional Bases for Pay

In a few words, the traditional basis for pay at the organization appear to have been designed in a manner that saw to it that compensation was the base pay while on the other hand solely top ranking managers were given bonuses (Chhaochharia & Grinstein, 2012). Nevertheless, transformations in the world of business have necessitated that the company embraces the total rewards approach, which allows workers to earn various benefits and incentives on top of their base pay. Certainly, this is an indication of a noteworthy advancement in the corporation’s compensation approach from the traditional pay structure, which was said to be lacking in many ways.

References

Chhaochharia, V., & Grinstein, Y. (2012). CEO compensation and board structure-There is an effect after all. Journal of Finance.

Davis, S. A., DeBode, J. D., & Ketchen, D. J. (2013). Dollars and sense: The implications of CEO compensation for organizational performance. Business Horizons, 56(5), 537-542.

Fogliasso, C. E., & Williams, A. (2014). Analysis Of The Business, Societal And Governmental Relationships Of Apple Inc. Leadership & Organizational Management Journal, 2014(1).

Sari, S. P. (2015). Apple Role through Fair Labour Association (FLA) in order to Fixing Foxconn's Sweatshop in China. Jurnal Ilmiah Hubungan Internasional, 10(2).