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8 pages/≈2200 words
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Business & Marketing
Term Paper
English (U.S.)
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Evaluating Existing Compensation Plan: Ford Motors Company (Term Paper Sample)


Assignment 2: Compensation Plan Outline
Using the same company you researched in Assignment 1 (Refer to EssayZOO order #00044991) , evaluate the company’s compensation plan to determine how it could be improved.
Write a six to eight (6-8) page paper in which you:
Evaluate the existing compensation plan to determine if it is the most appropriate for your company. Explain your rationale.
Determine the most beneficial ratio of internally consistent and market consistent compensations systems for the company you selected.
Evaluate the current pay structure used by your company and assess the recognition of employee contributions.
Make two (2) recommendations for improving the effectiveness of the discretionary benefits provided by the company you selected.
Evaluate the types of employer-sponsored retirement plans and health insurance programs provided by the company you selected and compare them to that company’s major competitors.
Use at least three (3) quality references. Note: Wikipedia and other Websites do not qualify as academic resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required page length.
The specific course learning outcomes associated with this assignment are:
Evaluate the effectiveness of traditional bases for pay (seniority and merit) against incentive-based and person-focused compensation approaches.
Compare and contrast internally consistent and market-competitive compensation systems.
Evaluate the role of benefits in strategic compensation.
Use technology and information resources to research issues in compensation management.
Write clearly and concisely about compensation management using proper writing mechanics.
Grading for this assignment will be based on answer quality, logic / organization of the paper, and language and writing skills. Please ensure all aspects of the questions are addressed.


Compensation Plan Outline
Course title:
Evaluating the existing compensation plan for Ford Motors Company
Ford Motors Company has a compensation plan that is an Incentive Bonus Plan, which offers cash awards to all employees and members on the achievement of a particular performance goal, in a particular year (Yang, 2014).Ford has a pay-for-performance culture that motivates and rewards employees for achieving the anticipated business result. The benefits program supports security income and protection from catastrophic loss (SEC, 2014). This motivates their employees and retains the workforce, hence, reducing turnover. Their competitive compensation attracts, motivates, and retains high performing workforce through targeting the average competitive level of automotive and leading companies within the national market. The company measures competitiveness based on program value for employees relative to the comparator group. When the incentive programs cannot provide competitive compensation due to business conditions, Ford uses their short term and long term retention programs that ensures they retain key employees that can respond to the operational and financial challenges (Yang, 2014; SEC, 2014).
The compensation plan for Ford is affordable to the company in mid-term and long-term, and the compensation plan is ensured not to fluctuate due to short term business conditions. The compensation plan also supports the company`s business performance objectives, and it promotes desired behaviours which is good for all companies in maintaining a competitive and high performance base. In addition, workforce diversity and individual choice is taken in to account in Ford`s compensation programme and this kind of flexibility is beneficial for the company`s performance (SEC, 2014). Ford Motors Company ensures that their compensation programs have a high degree of consistency among pay levels and employee groups, and a stable global program subject to any legal or competitive constrains which does not fluctuate with time. The compensation plan is delivered to employees in a way that it is tax effective and practicable to Ford, and the plan is easily administered while leveraging economies of technology and scale.
Ford has a clearly defined metrics for their compensation plan that is aligned with the business performance metrics which helps to measure and improve the results of the business. The total direct compensation for named executives are base salary, annual cash incentive, and long term equity incentive and they are all heavily weighted towards performance. The base salary for named executives is 25% of the target opportunity and the executive target compensation for executives is contingent on meeting incentive plan metrics (SEC, 2014). The company compensation plan is effective and strategic to increase employee morale and productivity through provisioning incentives and benefits, balancing its compensation cost and balancing the financial needs of the company with employee needs, and therefore, the Ford Motors Company`s compensation plan is appropriate due to the above stated reasons.
Ratio for internally consistent and market consistent compensation system for Ford
The most beneficial ratio for Ford`s internally consistent and market consistent is 1:1. Internal consistency is a concept of strategic management and it involves the ability of the strategy undertaken to be aligned with the general strategic company objectives. It is based on the extent of tests and procedures used in assessing the same characteristics, quality and skills for the employees thereby, creating the company`s structure. Internally consistent compensation system makes employees feel like they are fairly treated in their pay and other benefits. Ford gets most of its benefits from rat...
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