Compensation Plan Outline

Assignment 2: Compensation Plan Outline

BUS 409 – Compensation Management

your company. Explain your rationale.

  1. Evaluate the exiting compensation plan to determine if it is the most appropriate for

A compensation plan refers to all the components of a compensation package (wages,

salaries, and benefits), the manner in which it will be paid, and for what purpose employees receive bonuses, salary increases, and incentives.

The company that I chose was Apple Inc. Apple Inc. covers the cost of healthcare insurance for its employees from their first day of work from 65% up to 100% for some positions. This is almost unheard in this day and time, most employers required employees to pay a portion of their healthcare, as well as the fact that some employees do not let you get insurance until you are with the company for three to six months. Their healthcare includes medical, dental and vision.

Apple Inc. also matches their employee’s annual salary up to 7% to put into their private pension plan. If you have a pension plan from a previous job, Apple Inc. may also give you the option to transfer it over.

Apple Inc’s life insurance offers four times your annual salary to your choice of beneficiary upon your death.

A big perk for Apple Inc. employees is that you can get a 27% discount on hardware and accessories purchased for yourself and close friends and family can receive up to 17% discounts. Employees also get the benefit of discounts and credit on their most popular products such as Mac, iPad and iPhone.

If you work on the Apple Inc. campus, they have and onsite fitness and wellness center. They give their employees the opportunity to take advantage of extra services such as a dietician and massage therapists.

All these benefits added to the pay structure of this company which I will go into detail later is the reason I believe this existing compensation plan is the most appropriate for Apple Inc. employees.

Apple Inc goal is to have pay that is comparable to those of their competitors and with

  1. Determine the most beneficial ration of internally consistent and market consistent compensation systems for the company you selected.

the current markets. Apple Inc. offers employee performance incentives and wants their benefits to remain cost-effective in the external market regarding compensation policies and government requirements (Cook, 2014). The key to achieving an internal and external market consistent compensation system is balancing between internal equity and external competitiveness. Employees will not make waves about their pay and benefits if it is compatible with employees in the same positions in a different company. Programs must be applied consistently throughout the company in order to achieve internal equity and comparing of data in the same market will help achieve competitiveness in the external market.

competitive with other companies offering the same services. Apple pays their employees at an hourly rate. Location and experience of the employee determines the range in hourly pay for the employees.

  1. Evaluate the current pay structure used by your company and assess the recognition of employee contributions.
  2. To avoid employee turnover, Apple pays their employees very well and it is very

The pay structure used by Apple Inc. depends on net sales and operating income

equally and is important in Apple’s business plan. At the end of every year, it is decided by the

compensation committee whether or not bonuses will be payed out. There are several factors that are considered such as the comparison of financial results to performance results (Apple Inc., 2015) Employee contributions are very important because employees have to put out good results and performance in order to get a good cash bonus.

Employee discounts can be a major consideration in talking about the pay structure of Apple, Inc. These discounts are offered at about 10% in all Apple stores and yearly, employees can get up to a 25% discount on equipment and also transfer 15% to friends or family.

Apple store employees have the opportunity to get up to four bonuses a year as part of their pay structure and the amount can range from 200.00 up to 5000.00 in the bonus and can be paid out in cash or stock, also Apple hardware can be part of the bonus, such as an iPhone.

One of the recommendations that I would make is concerning the leave that is offered to mothers with a newborn. Expectant mothers can now take up to four weeks before a delivery and fourteen weeks after. Non-birth parents now get six weeks of leave (Eadicicco,2014). I would recommend that non-birth parents be giving the same amount of time after the birth of a child, which is the fourteen weeks.

  1. Make two (2) recommendations for improving the effectiveness of the discretionary benefits provided by the company you selected.

The reason I recommend this is that fathers are very active in the roles of their children form the very beginning and if they can be giving the same opportunity to stay home with mom and baby for the fourteen weeks, it will be beneficial to the family as a whole. Also, a lot of people are unable to have their own children, so they are adopting and most are taking these babies right home form the hospital as newborns. I don’t think it’s fair that a parent doesn’t get to spend the fourteen weeks the newborn just because they did not give birth to them.

Another recommendation I would make in regards to improving the discretionary benefits offered by Apple Inc is the wellness center. The wellness center is a perk offered to the employees who work at the headquarters in Cupertino, CA. The wellness center features a full fitness center, massage therapists and other great thing. It has just been upgraded to include a concierge like healthcare experience where they can get all their healthcare needs in the same building.

I know that it is not possible for Apple to put wellness centers everywhere they have stores, I think they should offer free fitness center memberships to their store employees who work in their Apple stores. These employees are very vital to Apple and are the first line of communication for their customers. It should not matter that they do not work in the headquarters, by adding free gym membership as a discretionary benefit to these store employees would be nice.

Evaluate the types of employer-sponsored retirement plans and health insurance programs provided by the company you selected and compare them to that company’s major competitors.

Apple’s Inc. health insurance plans can differ among their employees depending on your job title, years of service and the location where you work. Their health benefits are very good for their full-time employees and even part time employees get full insurance coverage after a year. The coverage is for the employee, also their spouses, same sex partners or domestic partners. Apple Inc. boasts that about 65% of their full-time employees have insurance coverage.

In comparison, Microsoft also has a very good health insurance plan for their employees. In 2018 they introduced a new employee health plan for its employees in their Seattle headquarters that was geared towards improving the patient experience. They have over 100,000 at this facility and are trying this new approach to approve the healthcare experience by connecting providers, patients and resources.

Both of these companies have death and disability benefits. They both offer preventive care and wellness programs. They both seem to be very close in comparison to the insurance plans and comprehensive package that they offer to their employees.

Apple Inc. retirement plan offers a ten percent match of employees that are eligible to contribute pay. They also offer 50% of the first six percent for the first two years. Apple has one of the best 401K match benefits. The 401K consists of fourteen different plans. Another great retirement benefit of Apple is that their employees are vested as of day one. A lot of Americans do not believe that Social Security will be around when it is their time to retire so therefore companies with good retirement plans are attracting the top talent.

In comparison, Microsoft’s retirement plan does not seem to add up to the benefits offered by Apple. Although they used to offer the same with the 50% of the first six percent, they have stopped that and although they still offer 50% match, but they have capped it at $9,000.


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