Factors That Regulate the Internal Alignment - Essay Example

Organizational factors: The strategies adopted to run the organization, Human capital that is going to be spent to develop the manpower resources, production design, hr policies which include the incentives systems which will lift the employee morale, internal promotional policies, and the employee's perception about the organization.

Geographic location is an important constraint that decides the internal payment structure of the organization as the location influences the standard of living of that employee. A posh locality where it demands high living costs require high compensation packages so the employee expects that the organization will compensate the expenses.

Profitability: As the company incurs profits the dispensable income will increase which will be given to the employees and stakeholders as dividends and bonuses. The more the profits the more will be the pay structure for the employees.

Employee performance: The employee's dedication towards the work and the way the employee performs the job activity will ultimately reflect on the organization’s performance and profitability. The best employee will be recognized by some incentives and rewards which in turn motivates the employee 3. External factors like government policies and regulations, culture and customs, and stakeholders play an important role in designing a pay structure as they provide the necessary inputs from unions and other parties to promote or to consider a compensation package for the employees that is socially acceptable. The organization requires individuals who can mold their experience into the mission and objectives of the organization for which there are working; to accommodate people of this high interface, the pay structure should be unique in its sense to entice the potential employees.
Egalitarian and hierarchical structures are two extremes in their field as the former is employee oriented and the latter is production oriented. The egalitarian structure promotes teamwork, unity, and equality among the employees but the hierarchical structure leaves a gap between the senior powerhouses and the ground technical workers which may project the communication gap in the organization. Differentiation according to these levels will result in misusing the authority towards the subordinates.
The method by which the job activities are carried out, the way the job activities are integrated into other job activities, and the unique payment structures will determine the effective inter-alignment of that organization. 
The pay structures should be competitive among the competitors and should isolate from other firms. They can lead to maintaining a low attrition rate and encourage the employees to compete among themselves to achieve personal success and pave the organization's success. The compensation should be open without any virtual income for a few to increase the trust of the employees. The pay structure should be according to the norms specified by the government authorities.