Section 11-3a discusses organizational climate.

With ever increasing minimum wages throughout the country along with increasing wage structures in this difficult labor market, prepare a short analysis (400 words) of the effect of new hires coming in at the same rate as existing employees on organizational climate. How can an HR manager work to improve that climate?

11-3a Organizational Climate and Compensation Philosophies

One important strategic objective of pay administration involves enhancing employees satisfaction with the companys total rewards system, which can improve their overall work attitudes. The goal is to create an organizational climate that reduces employee dissatisfaction with their current compensation.

To motivate employees and direct their efforts toward organizational objectives, managers must also establish a guiding philosophy regarding total rewards and communicate this approach. Ideally, there will be a good fit between the compensation philosophy and the preferences of employees, which should increase their satisfaction with the compensation they receive. Companies also need to properly manage the compensation philosophy to ensure that employees believe they are being treated fairly.29 There are two basic compensation philosophies that are situated at opposite ends of a continuum, as shown in Figure 11-3. At one end of the continuum is the entitlement philosophy and at the other end is the performance philosophy. Most compensation systems fall somewhere in between these two extremes.

FIGURE 11-3

Continuum of Compensation Philosophies

Entitlement

• Pay and raises based on length of service
• Across-the-board raises
• Pay scales increased annually Industry comparisons of pay only
• Holiday bonuses given to all employees

Performance

1. Pay and raises based on performance 2. No raises for poor-performing employees 3. Market-adjusted pay scales No raises for length of service or job tenure 4. Industry comparisons of total rewards

Entitlement philosophy

Assumes that individuals who have worked another year with the company are entitled to pay increases with little regard for performance differences

Pay-for-performance philosophy Assumes that compensation decisions reflect performance differences

Entitlement Philosophy

The entitlement philosophy assumes that individuals who have worked another year with the company are entitled to pay increases with little regard for performance differences. When organizations give automatic increases to their employees every year, they are using the entitlement philosophy. Most employees receive the same or nearly the same percent- age increase.

Performance Philosophy

A pay-for-performance philosophy assumes that compensation decisions reflect performance differences. Pay raises or incentives are structured to reward performance differences (quantity, quality, speed of work, customer satisfaction, etc.) among employees. Outstanding performers are compensated with substantially greater pay increases and higher variable rewards than employees who perform at only a satisfactory level. Employees who per- form below standards do not receive pay increases and are often placed on performance improvement plans.

Few organizations follow an exclusively performance-oriented compensation philosophy, but the overall trend is toward greater use of pay-for-performance systems. Given this increased focus on pay-for-performance philosophies, performance measures should reflect important outcomes to shareholders, customers, and employees.

This is not a 3rd party question

Please write it down 400 words

thank you

MGMT 314

HUMAN RESOURCE MANAGEMENT