Pay for Performance and Compensation Strategy - Research Paper

Introduction

Every organization need strategic planning to facilitate the compensation philosophy to support the goals of the company's success. For instance, if experience, sophisticated skills and quality are the firm's strategic strengths, then it needs to hire highly experienced workers. It is paramount to review the strategic plan of the business every year to determine the basic decision pay with the senior management to make sure that the pay-for-performance compensations procedure prevents severe consequences such as lawsuits and employee turnover (Tyson, 2015). The goals for the pay-performance system influences that Facebook needs to use for the employees to make personal choices should align with the company's vision. Usually, the purpose is divided into three agenda:

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• To motivate interested people to join the firm
• To encourage workers to perform better
• To help employees keep their jobs

The Key Short and Long Elements of Remuneration that Facebook Should Use

The primary elements of the executive remuneration consist of:

• Fixed and necessary fees and salaries
• Payable, short-term incentives and shares invested in the medium-term variables
• Long-term incentives subjected to both performance and co-investment conditions

Life insurance, pension contributors, health and disability and several other benefits are also issued. For senior people, the compensation packages are also reviewed after one year. Under these reviews, the context is undertaken under:

• The existing mix of variable and fixed compensation
• The performance of business unit relevance
• The employment and pay conditions in the group and the market at large

To determine the benchmarks of applying for short-term and long-term compensation, FaceBook should consider similar roles played by their competitors and if they are appropriate for the organizations concerning the complexity and size (Tyson, 2015).

Short-Term Incentives

Each year, FaceBook should come up with challenging performance situations that operate against the target by determining the size and if the incentive pool exists. In aggregate, the incentive pay that was previously paid as compared to 2009 reflected that the bonuses should also be paid to the executive directors (Spindler, 2015). Individual targets to both strategic and financial for running the company requires the C.E.O's to be given incentives because of the goals they are given. With such, they should get their incentives regarding PSA's and cash bonus for at least two years.

Long-Term Incentives

After the review policy in 2008, FaceBook compensation committee maintained their incentive plans due to the terms of grant levels, vesting schedules and performance criteria. However, the company needs to take into consideration that there is intense, competitive pressure because of the general economy competitors and behaviour (Spindler, 2015). The only way they can do this is by using the employee share ownership. This way, people will be responsible and motivated for working even harder.

The Effectiveness of the Monetary and Non-Monetary Incentives

These types of incentives are useful but under certain degrees. For instance, the monetary incentives are sufficient when the workers are motivated by hard or cold cash or more pay that increases their compensation. On the other hand, the non-monetary studies are useful only when driving the behaviour of the workers. As defined by Bob Nelson this type of incentive is also known as the 'guru of thank you' because it only rewards workers by giving them recognition and praise (Spindler, 2015).

Long-Term and Short-Term Incentive Plan Design

Incentive compensation plays a vital role in an executive compensation package. By developing a model, it is essential to ensure that it drives the desired results and performance. Moreover, since the executive compensation packages include several incentives like annual, long-term and medium-term incentives, FaceBook should consider the measures they will use to make plans that will harmonise work. The company should also find the stock options as a long-term incentive plan by introducing other cash-based or equity mid-term incentive plan to create a more diverse array of productivity as well s balancing the executive focus of near-term and long-term organizational performance (Spindler, 2015). It also takes a rigorous and holistic approach to execute the incentive plan by not considering the design metrics, features and competition for each program and how they work. Facebook should consider such details because are vital for creating an effective plan design to optimise the link between performance and pay while mitigating the enterprise risk.

The Pay Structure That Defines Employee Compensation

The pay structure consists of setting up salary scales and pay grades, but under the market data and the roles of workers. While job descriptions and job titles should also be aligned with the current pay, Facebook should use the below guide to set up the pay structure (Charnes, 2005). The Job Analysis; The first step is by eradicating the job duties, qualifications and requirements by talking to their departmental heads concerning the typical job description in the social media industry.

Facebook should also do a job evaluation to determine the value of the company by reviewing vital criteria like the skills, knowledge and effort needed to sustain the revenue

The company should also benchmark to determine the market price based on the salary range as well as the market trends

Lastly, FaceBook should also consider the pay grades by grouping the salary ranges with their competitors.

How Facebook Can Set Paygrades

The first way is by determining the minimum and maximum pay beginning from the beginning and lowest grades that by listing all the companies positions by using the salary data survey. The company should also establish and select some categories, based on the job diversity, size of the company and job evaluations at large (Charnes, 2005). Large company's like FaceBook should use more grades while smaller companies should use fewer categories. The company should also create a pay grade chart and later do a review and amend to ensure that the pay grade is adjustable every year.

References

Charness, G., & Kuhn, P. (2005). Pay Inequality, Pay Secrecy, and Effort: Theory and Evidence. doi:10.3386/w11786

Spindler, J. C. (2015). Long-Term Incentives to Underperform in the Short Term. SSRN Electronic Journal. doi:10.2139/ssrn.2663675

Tyson, S. (2015). A New Day: The Call for a Demonstrable Link Between Pay and Performance. Pay for Results: Aligning Executive Compensation with Business Performance, 1-19. doi:10.1002/9781119197423.ch1