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200$250$165$200$135$165$105$135$65$105$25$65Percent of Base Salary 169。 2020 by Prentice Hall 105 The Nine Criteria for Developing a Compensation Plan 1. Internal versus External Equity Will the pensation plan be perceived as fair within the pany, or will it be perceived as fair relative to what other employers are paying for the same type of labor? 2. Fixed versus Variable Pay Will pensation be paid monthly on a fixed basis — through base salaries — or will it fluctuate depending on such preestablished criteria as performance and pany profits? 3. Performance versus Membership Will pensation emphasize performance and tie pay to individual or group contributions, or will it emphasize membership in the anization — logging in a prescribed number of hours each week and progressing up the anizational ladder? 169。 2020 by Prentice Hall 101 169。 2020 by Prentice Hall 102 Challenges ? Identify the pensation policies and practices that are most appropriate for a particular firm. ? Weigh the strategic advantages and disadvantages of the different pensation options. ? Establish a jobbased pensation scheme that is internally consistent and linked to the labor market. ? Understand the difference between a pensation system in which employees are paid for the skills they use and one in which they are paid of the job they hold. ? Make pensation decisions that ply with the legal framework. 169。 2020 by Prentice Hall 106 The Nine Criteria for Developing a Compensation Plan (cont.) 4. Job versus Individual Pay Will pensation be based on how the pany values a particular job, or will it be based on how much skill and knowledge an employee brings to that job? 5. Egalitarianism versus Elitism Will the pensation plan place most employees under the same pensation system (egalitarianism), or will it establish different plans by anizational level and/or employee group (elitism)? 6. BelowMarket versus AboveMarket Compensation Will employees be pensated at belowmarket levels, at market levels, or at abovemarket levels? 169。 2020 by Prentice Hall 1010 When to Use a Jobbased Pay Policy ? A jobbased pay policy tends to work best in situations where: ? Technology