Assignment 1: Compensation Practice of FORD

Assignment 1: Compensation Practice of FORD

Introduction

An American multinational automaker, The Ford Motor Company is headquartered in the suburb of Detroit i.e. Michigan city of Dearborn. Henry Ford laid its foundation and incorporated in on 16th June, 1903. The Employee Benefit wing of this firm facilitates plans and programs of compensation benefit that varies from design and implementation to the termination. The expertise and experience of personnel in Ford advice all employees related to the different kind of qualified and non-qualified deferred and retirement compensation plans and agreements and other related matters.

This paper discusses the compensation practices at Ford with the evaluation on the current compensation plan. It also determines the most advantaged ratio for the compensation system that is market consistent and internally consistent in the selected market. The current pay structure and evaluation of the contributions for the employee recognition is also evaluated in this study. Few recommendations are also provided for the efficient implementation of the discretionary benefits offered by the company. The last sections of this work includes assessment of employer-sponsored health insurance programs and retirement plans. These plans and programs are further compared with the primary competitors of this company.

Discussion

Existing Compensation Plan of the Company

The compensation plan at Ford is regarded as Incentive Bonus Plan that was adopted in the year 1998. It offers cash awards to all members on the basis of the achievement of a particular performance goals that are associated to a particular year. The purposes of any award are on the basis of established performance criteria. The example includes evaluation of criteria against customer satisfaction, quality, different financial measures, productivity or any other set forth in the annual plan of the company.

The Compensation Committee assesses all the employee members for the criteria selection of awards on following variables (the weightings of each variable is given in parenthesis):

Criteria

Weightings

Corporate PBT (Profit Before Tax)

35%

Corporate Automotive operating-related cash flow

35%

Corporate cost performance

10%

A weighted average of all business unit market share performance

10%

A weighted average of all business unit quality performance

10%

The participating subsidiaries and management of the company pay all the expenses of the compensation plan.

Most beneficial ratio of internally consistent and market consistent compensations systems for FORD

There are two types of the compensation system that includes internally consistent and market consistent compensation system. It is necessary for organizations to create a synergy and balance between business and internal considerations within the compensation system.

Ford tends to get the most benefit from the rations of internally consistent compensation system. It defines the job evaluation and job analysis evaluation as key variables or rations for the creation of internally consistent job structures at Ford. Such compensation system at Ford gives the relative worth of each type of business amongst all other roles in Ford. A fundamental principle is used in the creation of internally consistent compensation systems. It requires higher capabilities, greater responsibilities, and more intensive intricate work tasks that should be compensated more than jobs. The requirements for such systems are ...