3.a. What policy regarding external competitiveness would you advise?

List
the options and the pros and cons of each policy option. Offer the rationale for
your recommendation?

In order to effectively obtain and retain the most competent and highly skilled marketing
manager for this particular startup company a substantial monetary return in relation to both
base pay and total compensation will need to be implemented. This compensation structure
will need to be at least 25 percent above market price based upon external competitiveness to,
in turn, ensure that this particular individual is both drawn to the company as well as being
highly motivated extrinsically while engaged in his/her duties. Within this particular scenario
the pay policy that would be most effective and efficient is the pay-with-competition-policy.
This policy strives to ensure that an organizations wage costs are generally equal to those in
relation of its overall competitors within its target market as well as having the ability to
entice applicants that will be generally equal to its initial labor market competitors. These are
all very positive aspects of the pay-with-competition policy in relation to external
competitiveness but there are apparent negatives which may surface as time progresses. A
negative aspect of the pay-with-competition policy is that it’s aligned with the current market
price meaning that other similar competitors will offer the same base pay for this particular
position to any qualified candidates.

Some people think that there is no difference between compensation and salary. Employee
compensation is a vital part of human resource management. Wages, salary and other forms
of employee's compensation constitute a very large component of operating cost.
Compensation is much more than the monetary incentive and rewards provides by the
employers (Guide to Managing Human Resources, 2007).
Money often is looked upon as a means of fulfilling the most basic needs of man. These
needs are made available through the purchasing power provided by monetary income- wages
and salary. For the accomplishment of a specific task, various rewards are given to the
employees. These rewards are in the form of pay plans. For a manager's position, the pay
structure should be defined in an appropriate manner (Gupta, 2005).
There are various kinds of pay plan. These plans are prepared for the benefit of the
employees or to motivate them in the organization. Various pay- plan options are merit based
pay plan, pay for performance plan, Merit plus incentive, Pay-for-knowledge plans, etc.