Evaluate the concept of market competitiveness in relation to an organization’s

Question

Evaluate the concept of market competitiveness in relation to an organization’s pay system, particularly when it is unable to offer its employees market competitive salaries due to a lack of financial resources.

Propose at least three alternative approaches for organizations which have limited financial resources.

Identify at least three specific steps that could be taken to minimize the impact implementing these alternative approaches could have on the firm’s success. Justify why these steps would be the most appropriate in this situation.

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Explanation / Answer

Organizations always try to compete on various aspects with other organizations in their industry. They try to be the most seeking company by the people and polls. So, one particular thing they focus on is the compensation pay system in relation to the market competitiveness pay system.

The internal compensation policies of the organizations play a major role in attracting and retaining the most qualified employees. If the business has to recruit and retain well-qualified and professional human capital, it's vital that companies pay a salary that matches or exceeds that offered by other businesses that operate in the industry. Rewarding employees with a competitive salary is one the best ways to hold onto good people and ultimately help in increasing the bottom line of the business as well.

If a company is not able to offer competitive salaries due to lack of financial resources, then it should look at other alternatives to make its employees happy. The level of monetary compensation a company offers is not the only way to remain competitive in the market. While paying substantially below to what the competion offers likely damages a company's financial credibility.

Therefore, the ability to recruit and retain good staff, is possible by making up for a minor shortfall and by ensuring that an attractive benefits package is offered. This could include performance-related stock options, flexible working conditions or enhanced holiday entitlements, etc. It depends on company to company how innovatively they try to fix up the situations when they lack in financial resources.

The three alternative approaches for organizations which has limited financial resources are -

The three options that could help in firm's success in implementing these alternative appproaches are -

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