HR Final
1
Compensating Employees
China
SNHU
02/07/2021
Compensating Employees
Many companies are reported to have compensation strategies that are not tied to company performance. According to the previous International Labor Organization report, more than 20 percent of manufacturing and service industries underpay their employees. According to the report, many organizations have collapsed due to low compensation strategies Bonache & Stirpe, 2012). The report also indicated that many companies pay executive employees lucrative salaries even when the company performance falls below stakeholders’ expectations. The report further indicated that there is an increasing pay gap between the executive and non-executive employees. Here, we are going to describe the compensation philosophy of Maersk and also determine how the market influences the company’s philosophy. Further, this paper will determine the value of salary surveys to the organization and the advantages of discretion benefits to Maersk.
Compensation philosophy
Compensating executive employees
Maersk compensates its executive employees following the direction issued by the company’s director. The professional compensation director is a consultant in the company. The compensation director forms a team with the company’s compensation committee to perform an objective analysis of its executive pay package (Carlock & Ward, 2005). In Maersk, executive employees are those who earn an annual pay of more than 200,000 dollars.
Executive compensation package
Mark's executive compensation package is mainly based on long term rewards over short term rewards. The company’s executive compensation package components are equity agreement, current core compensation, employee benefits, clawback provision, and separation agreement. The components of current core pay include base pay and bonuses. Base pay is the total money executive employees receive annually. The company issues its employees with bonuses when they exceed their goals.
Compensation for contingent workers
Contingent workers in Maersk include ob-call employees, temporary workers, part-time workers, contractors and leased employees. Contingent employees work less than 35 hours a week. the company’s contingent workers are both voluntary and involuntary employees. The company has many contingent employees as a strategy to minimize labor costs and allow its employees to advance their careers (Carlock & Ward, 2005). Maersk has also employed contingent workers who are unable to find full-time employment in other companies. The benefits that contingent employees are entitled to in Maersk are calculated based on the number of hours the employees work. the employee benefits for contingent employees include patient protection, affordable care, paying insurance premiums, overtime, minimum wages and nondiscriminatory compensation
How market influences the compensation philosophy
External and internal factors such as level f income, employment rate, inflation, and government policy influence its compensation strategy. Areas with a high demand for labor make the company increase its compensation rate (Torstensson & Sonesson, 2010). Those with a high supply of laborers make the company spend less money in compensating its employees. Also, the lower the unemployment rate, the higher the company pays its employees, and the higher the unemployment rate, the lower the company compensates its employees.
Value of salary surveys to an organization
The company engages in a salary survey to focus on geographic regions, job titles, employer sizes, and industries. The survey data comprises quantifiable aspects of compensation such as merit increase, base salaries, salary ranges, incentives, starting salary, allowances, benefits, working hours, and increase percentages. The company engages in salary surveys for benchmarking purposes, enables them to design a total reward compensation package, and also helps it to keep up with compensation trends. Salary survey also provides data on the turnover and retention rate in the organization.
Advantages of discretionary benefits to Maersk
Maersk provides its employees with additional benefits that are not determined by the law. These benefits include mental health, physical health, prescription drugs, substance abuse, dental and vision insurance for workers and their families, a pension plan, life insurance, payment for childcare, and tuition assistance. The company pays part of the cost of the benefit plan for its employees. Through the provision of these benefits, the company builds a positive relationship with its employees (Torstensson & Sonesson, 2010). Besides, the company also provides these benefits to match competitor’s benefits. Finally, the company gives these benefits to boost productivity and offer choices to its employees.
In conclusion, this paper has described Maersk’s compensation philosophy by identifying executive and nonexecutive employees’ compensation packages and the benefits of survey data and discretion benefits.
References
Bonache, J., & Stirpe, L. (2012). Compensating global employees. In Handbook of Research in International Human Resource Management, Second Edition. Edward Elgar Publishing.
Carlock, R. S., & Ward, J. L. (2005). Assuring a healthy business. In Family Business (pp. 17-30). Palgrave Macmillan, London.
Torstensson, P., & Sonesson, L. (2010). Supply Services to Arctic Offshore Operations; Macro-environment, Market Demand, and Business Potentials–The Case of Maersk Supply Service.