Quiz 3: Defining Internal Alignment
The first and foremost factor in strategic approach for paying is setting targets. Internal alignment is the second factor which is defined as relationships within the organization. Before deciding the duties and payments for employees in different department of an organization, it is important to understand relationship between the departments. Internal alignment depicts the logic behind these relationships. This association creates a pay structure in such a way that must support the strategy of the organization, maintain the work flow and stimulate attitude toward targets of the organization. Internal alignment which is also referred as internal equity is explained as the relationship among difference job roles, departments, efficiencies and capabilities in an organization. The management of the organization should divide the main job into subparts in order to support the strategic moves of the company. Next pay structures are designed to maintain the work flow, which is to smoothly maintain the processes of manufacturing products for raw materials and providing services to the clients. Sometimes it is quite challenging to design a pay structure which can encourage employees to achieve the targets of the organization. For that, the management needs to incorporate appraisal policies and increase the payments for promotions, higher responsibilities and for more difficult tasks.
The amount paid to the employee mostly depends upon the nature of job such as experience, skills, working conditions, value addition to final product or service etc. therefore, employees are paid differently. 1. In terms of levels: The concept of level in determining a pay structure implies that a person will be paid depending on the number of levels falling in his hierarchical path. Based on the numerous job titles, the pay structure has numerous levels. In examining pay differentials between most of the violin I jobs and the Principal Violin II job, a large differential exists ($2,483 vs. $3,488). Through the given details of the orchestra it is evident that there are chances that level has a role in determination of the pay level. This is so because as given in the data it is seen that the higher level employees like the principles or the master are paid higher. There are chances that this may be because they have comparatively lesser levels to cross to reach the highest level in the hierarchy. In terms of Differentials: Differential in terms of pay defines the differences between salaries of employees based on various factors like skills, knowledge, etc. Fairly large pay differentials also exist between many of the other principal instrument and the other principal instruments and the other principal instruments and the others playing the same instrument (for example, principal horn pays $3,390 and horn pays $1,548). Since the pay structure contains multiple levels and large pay differentials exist, it is a hierarchical job structure. In an orchestra, the base for differential seems to be the experience carried by the individual instrumentalist in the team. This is because skill and knowledge regarding their instruments are possessed by all of them. Job-or-Person based approach: Job based approach is where the focus is on the job and in a person based approach; the focus is on the person's personal qualities. The focus of the job structure appears to be based on the work content-the tasks and responsibilities. Based on the many job titles, the jobs appear to be well defined and most jobs probably involve detailed, specific steps. The evidence most likely supports a job-based pay structure. In an orchestra, it can be seen that the pay level is based on the job approach. The person approach does not fit well here because skills and knowledge of instruments is possessed by almost all the team members. The requirement of the job in terms of responsibilities and duties plays an important role in pay determination. For example, the master of the team is paid more depending on the additional responsibilities his job carries. 2. The structure of O is hierarchical and layered structure. There are different levels of violinists and other different instruments. This suggest that O has structure where experience and skill level of an instrument player is taken into account for deciding his pay. Within violinist there are different pay structures depending upon the type of violin and the experience level of player. Violin I receive more than oboist and trombonist, also principal trumpet receives more than principal cellist and principal clarinetist. However, principal trumpet receives less than principal viola and flute players. This is due to the complexity of job. The violin is more complex instrument than oboe or trombone, thus it pays more. Also, it is possible that violin and flute contributes more towards organization goal. This can be seen from the number of players that violin job has. 3. The principal viola has $5,036 pay while next highest paid viola has $2,483 dollar pay. Thus, calculate the difference between their pay as shown below: The principal trumpet has $4,233 pay while next highest paid trumpet has $3,638 dollar pay. Thus, calculate the difference between their pay as shown below: There is differential between their pay due to their skill level and experience. While the principal player will play more complex notes the non-principal one plays less complex ones. They are according to the motivation and performance. According to tournament theory the higher difference between the pay of boss and subordinate will result into more hard work to reach the same pay scale. They are not more small or larger to have correct balance and not to resent the employees. The differentials between trumpet and viola player is higher due to the demand. Most of the orchestra group consist of viola thus there is more scope for improvement and promotion. While there is very less trumpet players thus all have of them have to be highly skilled and experience. Therefore, the trumpet has less differential. 4. The equity theory states that employees feel that pay structures is fair if they are receiving higher salary within the structure, or they are relatively getting paid better than other employees in same industry. The equity theory applies here as the differentials for various instruments is highly variable. Thus, employees might not feel that they are receiving fair pay. According to tournament theory the higher difference between the pay of boss and subordinate will result into more hard work to reach the same pay scale. they have to be such that it motivates employees to perform higher and not resent them. The jobs where differential is higher such as viola and violin will make employees work harder. The institutional theory suggest that industry practices are used as structure. Here, the high differentials suggest that competency-based pay system exists. Therefore, it could be said that customs and traditions do play role.
The first and foremost factor in strategic approach for paying is setting targets. Internal alignment is the second factor which is defined as relationships within the organization. Before deciding the duties and payments for employees in different department of an organization, it is important to understand relationship between the departments. Internal alignment depicts the logic behind these relationships. Internal alignment which is also referred as internal equity is explained as the relationship among difference job roles, departments, efficiencies and capabilities in an organization. The relationship among the departments of an organization creates a pay structure in such a way that must support the strategy of the organization, maintain the work flow and stimulate attitude toward targets of the organization. The factors on which the pay structure of an organization depends are the number of levels of tasks, the pay differentials between the levels and the criteria which are used to find out these levels and differentials. Number of levels of tasks: The first factor of any pay structure is actually the hierarchical nature of the organization. It depends on the number of levels and number of individuals to report. Both compressed nature with fewer levels and more hierarchical nature with multiple levels are present. Differentials: Differential is referred as the difference in pay structure among various levels. The methods of distribution of compensation are of two types. In the first case, there are organizations in this market those who believe in distributing compensation equally among the employees irrespective of their positions. But other organizations maintain the process of paying more to the employees those who are more efficient, having higher responsibilities, working in unpleasant and tough situations and add more value to the revenue of the organization. By this initiative, the organizations try to encourage employees to attempt for promotion to a higher position. Criteria: In order to find out the internal structure, work content and its value are the most significant factors. Work content is explained as the amount of work and the processes by which these works are performed in a job, whereas value is defined as the appeal of the work and its relative involvement to the targets of the organization. A pay structure depending on the content of work stresses on the expertise required, difficulty of the tasks, trouble solving and duties. On the other hand, a pay structure depending on the value of work emphasis more on comparative contribution of this expertise, jobs and duties towards the targets of the organization. Among these factors, the criteria that are used to find out these levels and differentials are actually considered as the most important.