Compensation Plan for Mattel

Custom Student Mr. Teacher ENG 1001-04 16 October 2016

Compensation Plan for Mattel

Mattel Inc was founded in 1945, known as one of the world’s largest toys manufacturing company, which is based on manufacturing toys such as Hot Wheels, Fisher Price, Barbie Dolls, American girl dolls, masters of the universe, etc. The company’s name was derived from its founder’s names, which were Matson and Elliot Handler. In 2002, Mattel started outsourcing its products to different countries such as China and other countries. Mattel has been able to expand its business in different areas throughout the world. It has a large share in the market due to its management procedures (Batemann, 2010). Equity Defined

Equity is the central theme in compensation, without equity the compensation system cannot be judged as fair since in justice prevails. For any organization, equity should prevail. In Mattel, the employees should be paid according to the level of work they do. Equity is commonly defined as anything, which has a value. In compensation equity can be, when fairness is achieved in paying equally to the employees according to the work performed. In equity prevails as a result of injustice in work or when the employee is not paid according to the work performed, when the value of work performed and compensation do not match. Equity arises in issues when economic and legal issues of equal pay are used for similar work. Pay differences are also created by the external situations prevailing in the market; pay the difference among the workers also leads equity to be discussed. Mattel Inc also considers equity important according to the programs it implements.

Compensation emphasizes more on the external equity prevailing. The external pay rates, which have been given to the employees in outside organization, company sets its pay according to it (Batemann, 2010). Total compensation plan for an organization focused on internal equity Internal equity can be defined as the fairness in pay when the employer’s pay is equal to other employees present on the same job. This pay is established according to the work he performs and its nature. In order to know the importance of each job Mattel Inc must focus on the importance, which each job holds. There are certain compensable factors, which are helpful in determining the compensation, which would be best suitable for the job. These factors include experienced required for the job, level of education required, physical demand of the work, handling of equipments, safety at work, and health and cleanliness conditions. There are different job evaluation methods used to determine the value of job.

Furthermore, the relative job evaluation method for organizations such as Mattel Inc is difficult. The methods of job evaluation such as point factor, job ranking, slotting, and scored questionnaires are helpful in determining the worth the job holds. The worth of job is based on the skills required, working conditions, responsibility, and effort required. Mattel Inc must consider all these factors when evaluating the internal job. It should make sure that equity prevails within the organization so that the employees are motivated toward their work.

These all approaches are subjective as they contain the proper procedures by which job evaluated can be justified. Total compensation plan for an organization focused on external equity External equity can be defined as the process according to which a fair wage rate is given to the employees, which is according to the external labor markets. Supply and demand differs among markets and the pay rate that varies according to the labor market. The wages provision varies in organizations. Furthermore, organizations must consider the following while setting the suitable pay rate for the employees (Equilar, 2009).

1. Industry Sector
2. Organization size
3. Product competition
4. Education and experience of workers
5. Geographical location

These factors are helpful in setting up the wages of the workers belonging to a particular company. The wage rate set should be compatible with these factors. The management responsibility is to set wages according to the job. The external market should be defined clearly, setting markets can lead organization to set too low wages, due to which employees will be de motivated. On the other hand, setting wages too narrowly can lead to high-pay rates, which would not be suitable according to the wage rate (Equilar, 2009). Advantages & Disadvantages of Internal and external equity

The principal advantage of internal equity is the pay rates are set according to employees work level, so they would be motivated and will work in the benefit of the organization. On the other hand, internal equity is costly, as an organization has to bear the cost. External equity main advantage is that it is less costly as the pay rates are set according to industry (Pector, 2008). It is important to consider the compensation so that justice prevails. Equity is a source of motivation for employees it helps to attract and retain employees. Those employees who would be paid equally will be a source of benefit for the employees, as they would work in favor of the organization. Those compensation structures should be developed, which are in comparison to the other organizations, so that employees can be retained. A successful organization is one, which practices this and beat the top.

Batemann, T. (2010).. Journal of Organizational Behavior , (18), . (2009). 2009 CEO Pay Strategies for S&P 500 Companies. Equilar , ( 5), . Pector, P.E. (2008).. Industrial and Organizational Behavior (5th ed.). , Wiley: Hoboken, NJ.


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  • University/College: University of Chicago

  • Type of paper: Thesis/Dissertation Chapter

  • Date: 16 October 2016

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