Unit Assignments Course TextbookMilkovich, G. T., Newman, J. M., & Gerhart, B. (2014). Compensation (11th ed.). New York, NY: McGraw-Hill/Irwin.Unit II PowerPoint Presentation You are the human resou

Unit Lesson

What is internal alignment, and how does it relate to establishing pay structures?

Many times, an organization does not discuss internal alignment and pay structures in detail with the employees. Not knowing is what leads to the various questions employees have in regards to pay equity. Although many companies have a policy that states employees are not to discuss salaries with each other, it does happen. Many employees question why their pay is not aligned with others in the organization. What determines what an employee gets paid? How does a company determine an employee’s worth? Why do companies have different pay levels? Why do employees performing similar but different functions receive differences in pay? If there is such a thing as pay equity, does it exist within organizations? These are questions that many employees ponder. These thoughts and questions will be addressed in Unit II.

When you think of the word internal, automatically you know it applies to those things within the organization. When you think of the term alignment, you should immediately focus on structure, togetherness, consistency, and equity. Putting these two words together should help you define internal alignment as the ability of an organization to develop pay structures that will support the company’s strategic goals, support the overall operation (work-flow), and motivate employees to meet organization objectives. Yes, objectives must be specific and measurable. The objectives must be set first in order for the company to determine what processes are needed to create the internal structures. Keep in mind that the strategies should ultimately position the company competitively among other similar companies. We all know that when an organization loses its competitive advantage, many employees look to find other employment opportunities.

In terms of pay structures, it is a known fact there are various levels of work and pay differentials among the various levels. The size of the organization is a determining factor in the levels of work. Many of us have had the opportunity to work for some really large organizations which had multiple work levels. In such situations, you have managers managing managers. Perhaps some of you have experienced this at one point or another. Many of you are familiar with the pay differentials and deal with it in your organizations. How do you view differentials within your organization? Do you think internal equity exists?

In order to determine the work levels and differentials, of course, certain criteria must be taken into consideration. All aspects of the position must be considered including the content, which refers to the actual work performed and the tools, skills, knowledge, or behaviors needed to get the job done efficiently and effectively. When you think about content, you must also consider how complex the job is and what additional responsibilities (i.e., supervision of others, or possession a bachelor’s degree) are required. Perhaps many of you are facing some of these issues now, which is why you have decided to obtain your degree. The issue of pay differentials is a big factor in motivating many to obtain their degrees.

The other basis for determining internal structures is value. Value can be identified as job worth. Many companies look at competitors when they determine the value and base their pay rates in a medium range in order to stay competitive. What do we mean by being competitive? Well, some companies will pay just enough to keep employees from going to another company. Some former HR Managers conduct wage analyses to determine if their organization is able to compete with other companies in terms of benefits and pay.

As, you can see, there are many key points to cover in this unit. As you read the material, do not only focus on some of the things highlighted in the above paragraphs, other key areas of emphasis include the following:

1. Identify the major factors that shape internal structures. Some of those factors may be external, as well as, organizational factors. 2. Distinguish how government policies, laws, and regulations have an impact on pay internal structures. 3. Best practices are often used or stated in an effort to eliminate complaints. Are best practices always the best thing for an organization? Think about it.

With this in mind, the pay structures should be fair. When employees are on board and agree with the structure, it leads to a better work environment. If an employee feels as though the pay differentials are not equitable and fair, it could lead to many issues and low performance. Employees have a tendency to work harder when they are happy and feel the reward at the end is worth it. This keeps morale high and motivates employees. It even helps the employees motivate one another. However, we must remember, as with anything, the company must look at all positive and negative consequences that may be a result of the internal alignment.