You are a consultant
hired by the Herrington Specialty Metal Sheeting Corporation of Detroit,
Michigan to assist the HR Director in redesigning the compensation system. The
organization has just gone through an acquisition of a smaller metal sheet company
with similar products. Herrington has grown from 80 to 100 employees as a
result. You are scheduled to meet with the HR Director and begin to discuss
what will have to be considered. You plan to tell her about the strategic pay
policies and pay models. Describe four strategic policy decisions that will
have to be made in designing her compensation system. What are these strategic
pay policies and how will they be relevant to the organization? In addition,
indicate what goals a compensation system should have.
The four strategic policy decisions that one
must make when creating a compensation system are intemal alignment, external
competitiveness, employee contributions, and management. A compensation system
should include efficiency, fairness, and compliance
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