Bumpbie Strategic Compensation

STRATEGIC COMPENSATION

To determine how Bumpbie compare with other area employers as it relates to wages and benefits, Paul should perform research that will show the current wages and benefits offered in the area. Once he receives those results, he should focus on the companies similar to Bumpbie. A key to making the correct strategic compensation decisions is to address the compensation philosophy, communication approach, and administrative responsibilities of a company’s compensation approach.

There are two compensation philosophies that companies may fall under: entitlement and performance. The entitlement philosophy does not measure performance; however, it is based on the length of service. If an employee works another year, they are entitled to pay increases. The performance philosophy is based on the employee’s job performance. Outstanding performers are compensated with substantially greater pay increases; whereas, poor performing employees do not receive pay increases (Mathis, Jackson, Valentine 2014). Paul can look at the history of pay increases of Bumpbie’s for the past few years. The history report should reflect of pattern which will show if the increases have been based on performance or years of service. Once he determines the compensation philosophy currently utilized by Bumpbie, he can determine if this is the best philosophy to for the company.

Then Paul will need to analyze Bumpbie’s current compensation strategy. The analysis should reflect how their compensation scale compares with the other companies researched. Bumpbie will fall into one of three categories: lag-the-market, match-the-market, or lead-the-market (Mathis, Jackson, Valentine 2014). Lag-the-market companies pay less than the other companies in their industry. Match-the-market companies are on the same pay level as their competitors. Lead-the-market companies are leading the compensation rankings. These companies pay