Posted: January 28th, 2023
Your CEO has come to you as the HR Director and tasked you with developing a different compensation package for employees. The current model is not working. The CEO is asking you to give her a briefing on describing the legal issues that influence compensation, describe the challenges in setting executive compensation levels and finally discuss the advantages and disadvantages of pay for performance or incentive pay and the conditions under which it might be most successful.
1000 MIN
SOLUTION
Legal issues that influence compensation include laws such as the Fair Labor Standards Act (FLSA), which sets minimum wage and overtime requirements, and the Equal Pay Act, which prohibits sex-based discrimination in pay. Additionally, the Age Discrimination in Employment Act (ADEA) prohibits discrimination against employees 40 years of age or older.
One of the challenges in setting executive compensation levels is determining an appropriate level of pay that both attracts and retains top talent, while also being fair to other employees and in line with the company’s overall compensation philosophy. Additionally, there is often pressure to align executive pay with company performance, which can be difficult to measure and compare across industries.
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