External Competitiveness Policy

External Competitiveness
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External Competitiveness
For any company to grow internationally, it is always necessary to assess the external environment to assess the industry's competitiveness and compare it against where it stands. External competitiveness can be defined as the financial perks that an organization pays its staff members compared to the other payers in the industry. Understanding external competitiveness can be crucial in how an organization's HR department can go about attracting and retaining new talent. The Amazon Corporation is a technology company that operates globally. As the organization expands, attracting and retaining highly skilled employees, including those in managerial positions, is crucial. One way to accomplish this is by implementing a competitive compensation policy that ensures the manager's compensation package aligns with other employers in the industry. This paper recommends an external competitiveness policy for the manager's position at Amazon Corporation.
Three external competitiveness policy options are available for the Amazon Corporation, including matching the market, leading the market, and lagging the market. Leading the market might be a good option, but the challenge might be the overall cost-effectiveness of the company's financial health. Lagging the market might not be the best, as that will automatically result in a high turnover of skilled and talented employees from the company to competitors. The match-the-market option is recommended since it ensures that the compensation for managers is competitive with the industry average. This approach enables the organization to attract and retain highly skilled employees, improve employee morale, and decrease turnover rates, which can be costly. While the lead the market policy can attract highly skilled employees, it can result in higher compensation costs for the organization. Lagging the market policy can cause high employee turnover rates, affecting productivity. The moment employees realize that other companies in the same industry are paying more than where they work, there might be a tendency to lose morale and even engage in a go-slow, which significantly affects the company's profitability in the long run.
Regarding forms of pay, the compensation package for managers should comprise both fixed and variable pay. Clemens (2021) notes that fixed pay should account for approximately 70% of the total compensation, including base salary, allowances, and benefits, while variable pay should account for about 30% of the total compensation, such as performance-related pay like bonuses and stock options. The rationale for having a substa...