MHR 749 Chapter Notes - Chapter 3: Human Capital, Institutional Theory, Equity Theory

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10 Feb 2016
Chapter 3: Defining Internal Alignment
Compensation Strategy: Internal Alignment
Internal alignment: the relationships between the jobs within a single organization
The relationships among different jobs inside an organization form a job structure that should
- Support the organization’s strategy
oThe organization’s strategy indicated how it plans to achieve its purpose, and
internal alignment help to achieve it
- Support workflow
oThe structure should support the efficient flow of that work and the design of the
- Motivate behaviour
oInternal job and pay structures influence employees’ behaviour by providing pay
increases for promotions, more challenging work, and greater responsibility as
employees move up in the job structure
Structures Vary Between Organizations
An internal pay structure is defined by
1. The number of levels of work
oPay structures reflect the flow of work in the organization
oSome are more hierarchal with multiple levels, others are compressed with fewer
2. The pay differentials between the levels
oWork that requires more KSAOs and whose results are valuable are given greater
pay than other jobs requiring less
3. The criteria used to determine those levels and differentials
oThe most common bases for determining internal structures are
Work content – the work performed in a job and how it gets done
Work value – the worth of the work; its relative contribution to the
organization’s objectives
What Factors Shape Internal Strcutures?
- External factors
oEconomic pressures
oGovernment policies, laws, regulations
oCultures and customs
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