- Assignment 2: Compensation Plan Outline
Using the same company you researched in Assignment 1, evaluate the company?s compensation plan to determine how it could be improved.
- Assignment 2: Compensation Plan Outline
The company used is GOOGLE
Write a six to eight (6-8) page paper in which you:
- Evaluate the existing compensation plan to determine if it is the most appropriate for your company. Explain your rationale.
- Determine the most beneficial ratio of internally consistent and market consistent compensations systems for the company you selected.
- Evaluate the current pay structure used by your company and assess the recognition of employee contributions.
- Make two (2) recommendations for improving the effectiveness of the discretionary benefits provided by the company you selected.
- Evaluate the types of employer-sponsored retirement plans and health insurance programs provided by the company you selected and compare them to that company?s major competitors.
- Use at least three (3) quality references. Note: Wikipedia and other Websites do not qualify as academic resources.
- I have included a copy of the first assignment
Running head: COMPENSATION PRACTICES
1 Compensation Practices
August 27, 2016
Professor Keith Lipscomb COMPENSATION PRACTICES 2
About Google Google, Inc. was founded in 1998 by Larry Page and Sergey Brin. The company started
out as nothing more than a search engine and has grown to include Google Doodle, AdWords,
Gmail, Google Maps, and Google Earth. They also launched Andriod, an open platform for
mobile devices that is used on multiple tablets and smart phones and Google Chrome, an open
source browser. In 2011, the company introduced the Google+ project, with the intentions of
bringing the richness and nuance of real-life sharing to the web and improve Google overall by
including people, their interests and relationships (Google, n.d.). The company has grown
significantly in the industry of internet information providers in a short amount of time.
Given the right compensation strategy, a company can attract and retain critical
employees. Compensation can include both monetary and non-monetary components to include
salary, health insurance, retirement plans and performance bonuses. Google goes the extra mile
to attract the top talent in the industry and was ranked first in Glassdoor?s Top 25 Companies for
Compensation & Benefits by their employees although they do not pay their employees the most
(Welch, 2014). Although Google offers competitive compensation packages, it is the perks that
give them an advantage over competitors when it comes to recruitment. At the Googleplex,
employees enjoy free of charge, on-site haircuts, a gym, laundry facilities, dry cleaning services,
and free meals and snacks. In addition to the free stuff, Google subsidizes child care and a
massage program to help employees out. Google believes that if they keep employees happy,
then they will be more productive. Their compensation strategy is based off of this belief
Best Practices COMPENSATION PRACTICES 3 Principle recruiter for Google Engineering, Bob See, claims that Google has a unique
strategy for determining what compensation to offer employees and will not negotiate
compensation packages unless the person?s current compensation is higher or if they have a
current offer that is better (Gillett, 2015). Google determines candidates by gathering current and
competing information from the candidate and putting together a standard offer package based
on established ranges for the level of the position, location and role. The standard offer package
includes base salary, bonus, and restricted-stock units. Google does not make offers below the
standard range, so even if the candidate?s current compensation is significantly lower, Google
will not change their offer. Any changes offered above the standard offer package must be
approved by the business unit?s senior vice president (Gillett, 2015).
At first glance it does not seem like Google has any compensation related challenges
especially since they offer a substantial compensation package. Unfortunately, after an employee
leaked a salary sheet, Google?s was accused of paying unfairly. This accusation was confirmed in
by Laszlo Bock in his book, ?Work Rules?. In an attempt to retain top talent, Google
implemented a counterintuitive strategy to pay unfairly (Feloni, 2015). The strategy resulted in
two people who were doing the same job to have significantly different compensation. Another
challenge that the company faces is that competitors and new companies are offering top talent
more than they are willing to give.
Impact on Company and Stakeholders
Google applies compensation practice to recruit the top talent for the company. By
retaining the top talent, the company maintains a competitive advantage over their competitors,
and increases the company?s productivity and innovation. Increased productivity and innovation COMPENSATION PRACTICES 4 result in increased revenues. This is the positive impact that compensation practices have on the
company and stakeholders; it brings more money into the company.
Compensation practices can also have a negative impact on companies and stakeholders.
If the company over stretches themselves in trying to recruit and retain employees, it can affect
their finances negatively. It is rumored that Google spent so much money on perks and benefits
such as free food that it was costing the company more than they were making. This makes it
hard for the company to meet their financial obligations and lowers the returns that stakeholders
get. In this scenario, the company has to make a decision whether to cut the benefit and have a
negative impact on the employees or take a hit financially and upset investors. Neither is an ideal
solution for the company.
Laws, Labor Unions, and Market Factors
There are several laws in place that regulate the compensation that employees receive.
The Equal Pay Act allows companies to compensate on seniority or merit and prohibits
compensation being based on gender. The Fair Labor Standards Act regulates the minimum wage
that employees are paid, overtime wages, equal pay and child labor (Johnson, n.d.). Google is
not impacted currently by labor unions as there is not one in place within the company. Market
factors do however affect compensation practices. If Google is not doing well in the market, it
must cut the compensation that it provides for employees. If other industries are offering
employees more, Google must do the same.
Effectiveness of Traditional Base Pay
The traditional bases for pay are merit and seniority. At this time, most of Google?s
employees are paid based on merit and performance. Employees who feel they are getting
compensated adequately are more productive, which is beneficial for the company. Given COMPENSATION PRACTICES 5 Google?s current level of success, it can be said that the compensation is effective in this area.
The company does not actually pay based on seniority. This has caused some problems for the
company as senior employees feel as though they should be compensated for the time they have
remained loyal to the company especially in such a competitive industry. COMPENSATION PRACTICES 6
References Feloni, R. (2015, April 4). Inside Google's policy to 'pay unfairly' - Business Insider.
Retrieved from http://www.businessinsider.com/google-policy-to-pay-unfairly2015-4
Gillett, R. (2015, July 10). Google's compensation formula - Business Insider. Retrieved
Google, Inc. (n.d.). Company ? Google. Retrieved from
Johnson, R. (n.d.). Importance of Compensation in the Workplace | Chron.com. Retrieved
Strickland, J. (2008, August 4). How the Googleplex Works | HowStuffWorks. Retrieved
Welch, C. (2014, May 23). Google offers employees best pay and benefits, according to
new survey | The Verge. Retrieved from
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