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Compensation Management Assignment Help

1. Evaluate the existing compensation plan to determine if it is the most appropriate for Amazon. Explain your rationale.

2. Determine the most beneficial ratio of internally consistent and market consistent compensation systems for the company you selected.

3. Evaluate the current pay structure used by your company and assess the recognition of employee contributions.

4. Make two (1) recommendations for improving the effectiveness of the discretionary benefits provided by the company you selected.

5. Evaluate the types of employer-sponsored retirement plans and health insurance programs provided by the company you selected and compare them to that company’s major competitors.

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Introduction

Today, the role of the Human Resources (HR) department is vital as they need to formulate different strategies for managing the entire workforce in a given working environment. Today, with increased globalization, companies are looking for expansion; however, before expanding into new geographical locations, the HR department needs to analyze the current needs of the organization and also determine the major gaps in the different HR processes of the organization (Hortaçsu & Syverson, 2015). It might happen that some of the employees will not be satisfied with the current compensation plan and compensation management within a given working environment. 

On the other hand, the employees that will be working in new geographical locations will be looking for higher pays and other benefits. Thus, the HR management team might require revising their current HR policies and other strategies in the present working environment. 

The HR management needs to review their current compensation plan, compare it with the compensation plan of the competitors and then modify it wherever required. It will thereby make sure of improving the morale of the staff in a given environment.

This report will discuss and review on the existing compensation plan at Amazon, will be reviewing the internally consistent and market consistent compensation systems, will be reviewing the current pay structure at Amazon, will also review the discretionary benefits provided, and finally will review the retirement plans and health insurance plans provided by Amazon in the present working environment (Hortaçsu & Syverson, 2015).

Evaluation of existing compensation plan at Amazon

It is important to select a job role to analyze the compensation plan at Amazon. In this report, it will include the role of a senior engineer working in US. When he will be joining the organization, the basic salary of this employee will be US $150,000. 

Second, he will be provided with starting bonus of around US $100,000 that will be paid over a period of next two years. Further, he will be also provided with stock-based compensation plan of around US $300,000 that will be vested over a period of 4 years. So, it will be 10% for the first year, 20% for the second year, 30% for the third year, and 40% of the fourth year (Brandt, 2011). 

The higher the seniority level in the organization, the more will be the pay package provided to the employees. The compensation might vary when compared to other competitors in the organization but it will more depend on the present HR policies and the future strategies of the senior management of Amazon (Brandt, 2011). It will be also important for the HR department to review the performance of the employee and accordingly provide him with higher pays and promotion in a given organization.

Most beneficial ratio of internally consistent and market consistent compensation systems for Amazon

Amazon is working in different industries and thus it will become more difficult to build their internally consistent and market consistent compensation systems. The purpose of building internal consistent system is to develop a compensation system that will remain aligned with the rank positions, benchmark salaries provided within the organization, and also address the indirect compensation needs of the employee such as retirement plans and healthcare insurance (Brandt, 2011). 

On the other hand, market consistent compensation systems will be developed based on the market pays offered to the given job position and job role in the organization. For example, in this case of a senior engineer, the salary offered to the employee will be around US $150,000 and other benefits (Stone, 2013). 

On the other hand, for the same job role, the salary offered by Microsoft is around US $190,000 and other supplementary benefits. Thus, the HR department while devising and developing internal compensation system needs to keep the beneficial ratio to 1 so that it will allow the employees to determine that the pays offered at Amazon are similar to what it is offered in the other organizations in given market conditions (Stone, 2013). It might vary on certain parameters; however, the HR team needs to adjust the remaining benefits in terms of indirect benefits offered to the employee in the organization.

Current pay structure at Amazon and Assessing the recognition of Employee Contributions

The current pay structure at Amazon is adhering to the market conditions and is also following the standard HR norms of the industry. The salary and other benefits provided to the employee are as per current prevailing market conditions and thus it will benefit to the employee from different perspective (Stone, 2013).

As mentioned before, along with the basic pay, the company also offers other benefits such as - health and medical plans, financial security, stock of units, adoption assistance, maternity and parental leaves, time off, employee discounts on the products that will be purchased from Amazon, and other Career Choice Programs (Stone, 2013).

The salary offered to the employees of different ranks will depend more on the job position in the organization (Stone, 2013). Even, the employees are satisfied by working at Amazon. There are reviews provided by employees at different HR portals that allow other candidates to review the HR structure and the HR payment structure that is offered at Amazon. 

However, the HR management team needs to constantly monitor the different HR strategies implemented in this direction. They need to adhere to the standard HR laws and accordingly ensure providing the best salaries to the employees in a given environment (Stone, 2013). Even, employees are contributing part of their salaries for ensuring financial security as well as purchasing of the insurance plans as provided in a given firm.

Two Recommendations for improving the effectiveness of discretionary benefits provided by Amazon

There are several discretionary benefits provided by Amazon as identified in this report. However, there are no specific indications provided on how employees will be promoted within the organization or how they will be provided with higher pays with the passage of time. It is thereby recommended to the HR management team to first analyze the performance of the employees and accordingly reward them with higher compensation or with promotions in the organization (Stone, 2013).

Second, the HR department needs to provide more opportunities of working at different geographical locations. It will not only enrich the overall experience of the employee but will also increase their rank, position, and might even provide them with promotion to work at senior positions in the organization (Larkin & Stephen 2012).

There are several other benefits that can be provided to employees in terms of bonuses for their performance in the organization (Larkin & Stephen 2012). Thus, the HR management team is recommended to deploy these recommendations to improve the current HR payment structure and overall HR payouts to employees in a given working environment.

Types of employer-sponsored retirement plans and health insurance programs by Amazon and comparing it with Competitors

Amazon is providing 401(k) plan through which it will ensure long-term savings as well as also offer investment options that will fulfill the objective of retirement plan for the employee. Second, they are already providing company-paid basic life and accidental death insurance so that it will ensure additional coverage for the employee from the insurance perspective (Larkin & Stephen 2012).

There are also insurance plans offered by the company to the employee both for short-term and for the long-term. Amazon also provides an opportunity to the employees to become the owners of the company through granting and vesting of Restricted Stock Units (Larkin & Stephen 2012).

There is additional Employee Assistance Program provided to the employee that will provide them with assistance on every aspect of work and personal life. Thus, the company and the HR management team are providing lots of benefits to the employee both from retirement and insurance perspective. The employees can however review these plans in other organizations such as Microsoft, Google, and several others for comparison purpose (Larkin & Stephen 2012).

It is identified that Microsoft is providing insurance plans for the family members as well. On the other hand, Google offers multiple benefits at the workplace in form of perks to motivate the staff and also improve their working morale (Arnaud & Wasieleski, 2014). The employees at Amazon can thus review it and later submit reviews to the HR department so that they can work on the gaps accordingly. 

Conclusion

This report discusses on the compensation plan and pay structure of Amazon for a given role of senior engineer. In addition, it has also identified the entire pay structure that is offered to the employees at a given workplace in the organization (Ederer & Manso, 2013). The HR department has formulated policies considering the current market position as well as expectations of the employees (Akingbola, 2013). 

The employee might have reviewed the pay structure and other benefits offered by the competitor companies. Under such conditions, it will be a moral responsibility of the HR department at Amazon to offer basic salary, additional benefits, bonuses, and other perks to the employees so that they can keep them motivated, provide them with desired opportunities, and subsequently ensure increased motivation levels of all the staff across all the departments at Amazon (Bettis, Bizjak, & Lemmon, 2005).

However, the senior management can review these HR mechanisms and identify the gaps, if any. They can thereby provide necessary recommendations to improve the future performance in a given working environment.

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