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Wage ManagementTotal CompensationHRM/324Wage ManagementWage management is an important aspect of a company and should be researched thoroughly in order to implement the plan successfully. The purpose of this paper is to explore how a small start up organization’s program would differ from that of a Fortune 500 organization. We will research and comment on how these two organizations may establish salaries for their employees and if they may be in the position to offer raises. Also considered will be how each entity accounts for competitor’s pay. SalaryStart-up companies and Fortune 500 companies have similarities and differences pertaining to salary. Funding is a major reason these two types of companies handle employeesalaries differently. It is difficult for starter companies because banks are leery of lending money because they do not have a financial record to back them up. A new company has to negotiate fortalent, unlike a Fortune 500 company; therefore when it is time to settle on a salary for an employee with the skills and qualifications the start-up needs it can be quite competitive. Fortune500 companies and start-up companies both have to research market salary ranges for the position, based on prospective employee’s skills, qualifications, and expertise. They need to consult numerous resources available, such as the U.S. Bureau of Labor Statistics. These specificresources will give the companies information about occupational growth, demand for workers, and the available factors that affect compensation trends. Another avenue for a new company to determine fair salaries is to research magazine articles and industry reports that contain salary data for start-up companies. A pay scale needs to be constructed based on the lowest desirable salary and the highest realistic salary. Fortune 500 company’s average salary is $47,000 dollars; of course the salaries can vary based on location, industry, and experience. Most prospective employees believe they will be paid more working for a Fortune 500 company; this is not alwaysthe case because research has shown that average salaries can be significantly higher at start-up companies.Raises in Fortune 500 Companies and Start Up CompaniesRaises are very significant in fortune 500 companies as well as startup companies. In factthey can be detrimental to the success of the company. Employee’s that start in a company manyaccept a lower salary in hopes that with time, and the opportunity to prove him or herself, he or she will be rewarded with a raise. One raise that both types of companies will take into consideration is the cost of living adjustments raise (COLA). The cost of living raise is based oninflation and is an effort to allow the employee to maintain his or her standard of living. Startupcompanies are often funded by investors and must be very cautious in their financials, therefore these companies may choose to give raises on more of a merit system; in doing so they can justify raises to their investors. Whereas fortune 500 companies have more room financially, they are not governed the same way; but they too must be careful with their financials.Fortune 500 companies are in more of a position to give cost of living raises and also give raises for merit, including bonuses. These larger more established companies may also giveSeniority pay, as they have been around longer and therefore have employee’s that have a historywith the company. Seniority pay is a reward to employee’s who have been performing with the company on consistent bases for a period of time. These are just a few ways that these companies can determine if an employee should be given a raise, and under what terms. Raises are a tool that companies have to motivate employees and also to keep them loyal. When an employee receives a raise or a bonus, he or she may feel appreciated. This will hopefully result in the employee maintaining and advancing his or her performance on the job. Therefore, it is a good practice for employers to give raises to their employees when they are eligible. Competitor’s PayEach entity strives to beat the competitor’s in their respective fields. Factors other than salary and raises that need to be considered are what competitors are paying their employees. These factors initially begin with the funding or resources that the organization has. Funding is the main player in how competitor’s pay is accounted for. In a start-up company, funding does not come as easily as a Fortune 500 company. In a start-up company, the company may only be able to offer the minimum of benefits or even just the salary rate. For a Fortune 500 company, they would offer more benefits as well as salary. As indicated in its name, the company is just starting, whereas Fortune 500 companies have been in the field for a while and has had theopportunity to financially grow. Competitor’s pay is used as tool to recruit and retain employees.When a start-up company is creating its business plan, they need to research the marketplace to educate themselves regarding what the salaried offered should be. Research includes searching websites, compensation surveys, and regression analysis. A Fortune 500 company needs to monitor their compensation packages using the same resources they did when the initially startedtheir company. In conclusion, start-up companies and Fortune 500 companies both have to obligations to create competitive compensation programs which are beneficial to the entity. Funding for start-up companies is an issue with determining salaries, raises, and analyzing competitor’s pay. Fortune 500 companies had to deal with these same issues, but have established themselves as financially responsible and understand the need to offer competitive

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UOPX HRM 324T - Wage Management

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