ID: 1610515

Independent University, Bangladesh

Summer 2016: MBA 509E: Human Resource Management
Home Work: 07 October 2016
Question: Explain how to arrive at an ideal pay-structure for a certain position in a business company. (Marks: 25)

Structure

Text (Marks level B+)

Para-1: Introduction:
Describe here an ideal
pay structure

Although there are many theories of employee motivation, it is

commonly said that pay is the greatest motivator. It is difficult to
suggest what would make an ideal pay structure for a certain
position. However, it is reasonable to say that an ideal pay
structure is a balance between employers and employees'
perspective.

Para-2: WHY pay?

Explain from
employer's point of
view

Students Text

There is no definite structure that can be considered as

"the ideal" salary structure for an organization in any
industry anywhere in the world. But, there are four (4)
basic compensation principles that organizations must
consider in the design and adoption of a good Salary or
Pay Structure. These are: Internal Equity, External
Competitiveness, Affordability, and Sustainability.
The first two (2) relate with employee and market matters
while the next two (2) relates to organizational financial
capability/ resources. Choices and decisions must balance
the two sides if the organization wants to avoid
operational problems.
Normally it is not explained why an employer should pay an
An organization's compensation practices can have faremployee. There are a number of factors that must be considered reaching effects on its competitive advantage. To develop
by an employer while fixing pay for a certain position. There is
a competitive advantage in a global economy, the
no denying that an employer should pay because he is buying
compensation program of the organization must support
time of an employee. But he must also consider that the pay to
totally the strategic plans and actions of the organization.
be offered should be good enough to motivate the employee,
By setting the right compensation package, organizations
develop loyalty to the company, be commensurate with market
will have that competitive advantage and employers will
standard and, also, a reward for performance. On the other hand, be attracted, retained and motivated to work in such a
pay to be offered ought to be cost-effective.
workplace.

ID: 1610515

Structure
Para-3: WHY pay?
Explain from
employee's point of
view

Para-4: Conclusion:
Add a comment.

Text (Marks level B+)

Students Text

The employee's perspective is different. First of all, an employee

needs money to fulfill family's basic needs and to survive. He
also needs money which will ensure a decent living and some
saving for post-retirement life. An employee also expects a fair
pay. He also expects that pay offered should reflect recognition
of his effort and quality. Also, an employee expects a pay
commensurate with his contribution to company's value-chain.
An employee would be very happy if he is offered a pay which
he can feel proud of.
As already said, an ideal pay structure will x considerations as
explained above. The problem arises because an employer may
not be able to afford an ideal pay as such. Yet an employee
should be aware of above factors that are important to consider
while fixing a pay structure for a certain position.

Salary is perhaps the main criteria of accepting or

declining a job offer. So it is important that the employees
should get a competitive salary. Pay structure should be
aligning with internal consistency and at the same time it
is at par with the industry standards. Employee benefits
typically refers to retirement plans, health life insurance,
life insurance, disability insurance, vacation, employee
stock ownership plans, etc.
Salary structures are an important component of effective
compensation programs and help ensure that pay levels for
groups of jobs are competitive externally and equitable
internally. A well-designed salary structure allows
management to reward performance and skills
development while controlling overall base salary.