Compensation Practice Essay Example | Topics and Well Written Essays - 1500 words - 1

Compensation Practice - Essay Example In order to keep low charges, the company decreases costs by the use of innovative electronic technology and warehousing. It also negotiates contracts for produce straight from manufacturers, eliminating the middleman. Wal-Mart incorporated in 1969 and became Wal-Mart Stores, Inc. In 1972, Wal-Mart was added to list of companies on the New York Stock Exchange, and it is the grocery retailer in the United States. Wal-Mart provides general produce: family attire, health and beauty assistances, electronics, toys, fabrics, crafts, lawn & garden, jewelry and shoes. Wal- mart runs a pharmacy department, Tire and Lube Express, and Photo processing center (Foley et al, 2000). Compensation strategies of Wal-Mart Inc., best practices they are applying, and compensation-related challenges they are facing. Effective compensation systems attract and retain qualified workers motivates employees, communicates an organization strategy, its cost structure reflects the organization’s ability to pay, and complies with all government laws and regulations. Compensation in Wal- mart is divided into two, cash compensation and fringe compensation. Cash compensation is the direct pay to the employee for work done. It has two components: base pay that is paid in terms of hourly or weekly over time basis. The second component is the payment contingent on performance. This is based on the merit increase, bonuses and increase sharing. Fringe compensation refers to employee benefits programs. Fringe compensation has two dimensions: legal required programs such as social securities and discretionary programs like health benefits, tuition reimbursement and pension plans. Wal- mart also faces compensation challenges such as high turnover rate. Approximately 70% of Wal- mart workers leave within the first year. Wal-Mart employees have been quitting their jobs because they have found other companies that pay them better and fair wage. The high number of employees quitting due to low wages has caused Wal-Mart to have a high turnover rate. Despite high turnover rate, Wal- mart is still able to affect the unemployment rate. Lack of health insurance benefits offered to employees is the main cause of high turnover rate for Wal-Mart. Workers need health insurance for themselves and families. Since their employees are not getting the health benefits needed they are leaving Wal-Mart to find another company that will give them the health benefits desired and for a lower out of pocket premium. Costly legal challenge is another challenge faced by Wal- mart, where it was accused of colluding to bound medical care for injured staffs in an attempt to save cash. In Colorado, the law gives workers with on-the-job injuries the right to file medical-care dues against their boss. Most companies carry insurance policies to pay such claims (Swezey et al, 1985). How Wal-Mart applies compensation practice to determine the positive or negative impact to the company and its stakeholders Sta keholders are people, organizations or groups who affect or can be affected by a company or organization. These stakeholders can be separated into two groups: the market and non-market stakeholders. The market stakeholders are those sets and individuals who have an economic post in what the company does. The non-market stakeholders are those groups and persons who have a non-economic stake and political stake in what progress the company takes. Wal- mart must strive to