The Compensation Philosophy of Maersk
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The Compensation Philosophy of Maersk
A compensation philosophy refers to the position adopted by a company in matters of
employee compensation. It provides a framework for paying employees upon meeting the
requirements of their tasks. Companies have different compensation philosophies that are largely
influenced by the prevailing factors such as industrial circumstances, size & financial position of the
company, and unique circumstances such as the availability of qualified talent. Today, many
organizations are using their compensation philosophy to attract, motivate, and retain talent.
Description and Market Influences of the Model
Maersk company has a philosophy model derived from the Danish Companies Act of 2010.
According to the act, a company needs to set up a guideline for providing incentives for its
management and staff members. Maersk employs an industrial approach where jobs are categorized
into different groups depending on the level of skills and expertise needed. Thus, workers in
different job groups are offered different salaries and incentives. Moreover, the incentives and pay
rise largely depend on the company's annual performance and output.
The approach is also unique because in providing salary increases or decrease, they
ought to evaluate the previous year's performance appraisals. This evaluation is done in line with the
set targets of individual employees. Overall, this approach encourages performance as employees
know that their salaries and incentives are dependent on both individual and collective efforts. Thus,
having a huge influence on the performance of the company.
The Value Salary Surveys have on an organization.
Salary surveys are conducted across the given industry or region to determine the standard
wages paid by other employees. This analysis helps to set the minimum and maximum salary
expectations in the sector, region, or job classification. Data collected is useful for companies
because it allows them to define the required salaries to attract and retain the right talents. For
instance, some big companies opt to provide higher salaries than standard to attract potential
expertise from other firms that may not be providing better conditions for their employees. As for
Maersk, better incentives and salaries means they are in a position to build loyalty required to retain
talent. It also shows Maersk’s competitive strength compared to other firms in that particular
market.
Advantages of Discretionary Benefits to Maersk
Discretionally benefits are the employee benefits not regulated and mandated by law. They
include but are not limited to vacation, child care, dental coverage, prescription drug insurance, and
life insurance. More often, the management and HR professionals' decision as to what range of
benefits should be provided in the employee benefits scheme. A properly structured discretionary
benefit scheme should capture the aspirations of employee empowerment. Thus, providing health
benefits, for instance, will ensure that employees are working optimally at all times. This will also
minimize cases of payable health leaves as employees will be motivated to seek diagnosis and
treatment. A better discretionary benefit system would transform into a motivated workforce for
Maersk.
Conclusion
A compensation philosophy governs a company's policies in terms of engaging employees on
payments and incentives. Maersk has a performance-oriented compensation philosophy where the
company's overall performance largely influences salary ranges. Employee salaries are a critical
aspect of running a company, and as discussed above, companies can draw many benefits by having
the right compensation philosophy. Good philosophy should be focused on attracting and retaining
the right talent.