Compensation and Performance Management for JTR Winemakers

Introduction

This paper is based on the topic of compensation and performance management. The paper analyzes a case study of a firm, called, JTR Winemakers. The top management of the company is concerned with the existing merit pay plan. This paper provides guidelines to the firm to implement a suitable pay and compensation management plan that caters to the needs of the employees working at JTR Winemakers.

Within an Organization (such as JTR Winemakers in this case), internal equity establishes equal pay for work of equal value and pay differences for work of unequal value. This principle focuses attention on a pay structure that reflects the relative worth of jobs within the Organization (such as JTR Winemakers in this case). The pay structure, then, is a system of differing pay rates for different work or skills within a single Organization (such as JTR Winemakers in this case). The pay structure is divided into various pay grades. Individual pay differences within pay grades may be supported by three criteria: work performed, competencies (such as certification), or work outcomes (Belcher, 58). In addition, the pay structure may group jobs into families. Job families are jobs of the same nature but requiring different skills and responsibility levels. For example, a nursing job family might consist of nurse assistant, licensed practical nurse, registered nurse, and nurse practitioner. Compensation experts may develop pay structures that are appropriate to particular job families within an Organization (such as JTR Winemakers in this case).

A fundamental tool in determining a job's value to an Organization (such as JTR Winemakers in this case) is the job evaluation method. The job evaluation method should have two characteristics (Brown, 38). First, it should provide a quantifiable method of ranking or rating jobs within an Organization (such as JTR Winemakers in this case), and second, it should involve a process designed to gain acceptance of the pay structure by those within the Organization (such as JTR Winemakers in this case). The job evaluation process, then, involves systematic data collection on jobs, analysis of those jobs according to a predetermined criterion, and a method of placing jobs into a pay structure that is perceived as fair. Because the pay structure is constantly revised, this task is never fully completed (Chamberlin, 45).

Merit-based Pay

Organizations (such as JTR Winemakers in this case) (such as JTR Winemakers in this case) often seek to link pay to a measure of performance in order to attract, motivate, and retain the best employees. The Organization (such as JTR Winemakers in this case) can link pay increases to the performance of an individual, a group, or the whole company. There are many forms of individual performance-related pay, the most popular being merit-based pay, because it can be applied to many jobs and covers a broad range of performance criteria.

Under a merit-based pay system, an employee's pay increase is based on a supervisor's assessment of performance over a previous time period, usually the prior 12 months (Belcher, ...