Navigating Market Competitiveness in Compensation Strategies

Market competitiveness is the one-upmanship a company has more than another. This one-upmanship can range from worker wages, growth, stock, and worker advantages. Competitive markets benefit business to remain in business and to keep up with its rivals. Business have to logically establish an one-upmanship by what the company can offer to exceed its rivals' offers. This rationale normally originates from the business's monetary resources and if a business lacks funds the company has to develop options.

Each employee needs will be various and will look for several things when looking for a task or profession.

There are hierarchies of employee requires that helps figure out if the company will be a great fit for the employee. Some individuals need a great salary and not advantages and others require good benefits and a sensible salary.

Market Competitiveness

Market competitiveness is when an organization has competition within the very same classification or market. In a competitive market, markets or organizations have to complete voluntarily and openly in order to be taken seriously in market competitiveness.

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Also by an organization being in a competitive market gives one an advantage over another.

Organizations have to very first research study its competition to see what they are doing and to establish a much better plan than their rivals. In a competitive market, the companies have to comprehend how and why their competitors are able to do some things. For instance,

Deal competitive incomes, B. Offer competitive training, C. Offer a great facility, D. Deal growth within the business, and E.

Deal a great environment.

Every employee has different needs and different aspects they for with in a company. An organization in a competitive market has to develop a rational salary structure and use the resources it has to appeal to the employees as well as potential candidates. According to Muthoo and Mutuswami (May 2011), “Moreover, increasing the competition beyond a certain degree increases the distance between the first-best and second-best levels of efficiency.” Market competitiveness has many aspects that aids with developing as well as considering the concept of market competitiveness in a pay system, competitive salaries and lack of financial resources, and alternative approaches.

Concept of Market

Competitiveness in a Pay System The concept of market competitiveness in relation to an organization’s pay system is developed by the company’s internal factors and external factors. The internal factors consist of salary rates currently, job value, job need, and employee need. The external factors consist of laws, the current market, and market need. According to Martocchio (2011, pg 150), “Market-competitive pay systems represent companies’ compensation policies that fit the imperatives of competitive advantage.”

Companies have to develop some type of pay system or structure in order to remain competitive in the market. A salary structure is a good way for a company to determine if a hierarchy would help with determining market competitiveness. The internal and external factors aid the company with developing a hierarchy of jobs and their salaries.

Competitive Salaries and Lack of Financial Resources Competitive salaries are very good ways of scouting or seeking for employees. In the economy today, candidates are looking for the best or the most competitive salary possible to be or feel financial stable. The reason for this is because people like to be financial stable more so than stress free. The position could be very stressful but if it pays enough someone would apply for the job. According to Martocchio (2011, pg150), “Market-competitive pay systems play a significant role in attracting and retaining the most qualified employees.”

Most companies are unable to offer its employees market competitive salaries because of lack of financial resources. Companies have to be in a positive place or the companies’ financial budget has to be in order to offer competitive salaries. The lack of resources can come from the company having a bad year, someone miss managing the company’s funds, or simply a slow turnover. Many companies now set budgets for new positions that need to be filled by a certain date and time by using a financial forecasting system. Alternative Approaches

The alternative approaches are the other ways the compensation for jobs or positions can be determined. Some of the alternative approaches are currently used to aid with justifying a positions value and need. A few alternative approaches for a company that has limited financial resources are:

Step 1: Deciding a number of pay structures, Step 2: Determining a market pay base, Step 3: Defining pay grades or levels, Step 4: Calculating pay ranges, and Step 5: Evaluating the results. According to Martocchio (2011, pg 151), “Compensation professionals create market-competitive pay based on four activities: A. Conducting strategic analysis, B. Assessing competitors’ pay practices with compensation surveys, C. Integrating the internal job structure with external market pay rates, and D. Determining compensation policies.

Conclusion

In conclusion, market competitiveness is the competitive edge an organization has over another. Market competitiveness is when an organization has competition within the same category or market. The concept of market competitiveness in relation to an organization’s pay system is developed by the company’s internal factors and external factors. Competitive salaries are very good ways of scouting or seeking for employees. The alternative approaches are the other ways the compensation for jobs or positions can be determined.