External factors influencing the design of organisational pay structure

As the organization becomes older, it may also become more mechanistic in structure. Basically, the compensation is in the form of salaries and wages.

An organization with a clear sense of mission, for example, can explain itself better to the world and can align itself with the positive elements in each area. Thus, there are several internal and external factors that decide the amount of compensation to be given to the workers for the amount of work done by them.

In a dynamic environment, the customers' desires are continuously changing—the opposite of a stable environment. Each item is made somewhat differently to meet a customer's specifications.

In a young organization, there is not much delegation of authority. Firms experiencing the decline of maturity may institute the changes necessary to revitalize.

Workers are highly dependent on one another, as the product passes from stage to stage until completion.

Factors Affecting Employee Compensation

Once a firm has reached the maturity phase, it tends to become less innovative, less interested in expanding, and more interested in maintaining itself in a stable, secure environment. For example, a business that has a large number of employees who work on many different projects, may benefit from a structure in which you authorize project leaders to make important decisions without needing upper-management approval.

Often the way they do that most persuasively is by example. In reality, if the organization is very small, it may not even have a formal structure. That's one reason larger organizations are often mechanistic—mechanistic systems are usually designed to maximize specialization and improve efficiency.

These companies may be operating on a strategy that involves paying slightly lower salaries to recent graduates in exchange for providing them with extensive training and professional development. Managerial salary structures are primarily internally determined except in very tight labor markets, without regard to organization type.

A good example of an organizational structure which has surfaced from newer technological developments is the virtual organization that links a network of organizations via the internet. Of course structure follows strategy due to the fact that organisational structures are designed to accomplish objectives by implementing the strategies.

Size and Organization Design Size is one of the primary contingency factors that affect organizational design. Banks, insurance companies, department stores, and restaurants are organizations with primarily market-oriented wage structures.

But during a period of depression, wages are cut because funds are not available. This results in a considerable uniformity in wage and salary rates. The type of structure that develops will be one that provides the organization with the ability to operate effectively.

Tasks are highly specialized, and detailed rules and guidelines dictate work procedures. The Multinational Corporation Factors Affecting Organizational Design Although many things can affect the choice of an appropriate structure for an organization, the following five factors are the most common: Like humans, most organizations go through the following four stages: Hence, labor costs may turn out to be lower than those existing in firms using marginal labor.

As an organization grows, however, it becomes increasingly difficult to manage without more formal work assignments and some delegation of authority. No productivity index can be devised which will measure only the productivity of a specific factor of production.

The cost of living index also influences the employee compensation, in a way, that with the increase or fall in the general price level and the consumer price index, the wage or salary is to be varied accordingly.

These choices are made easier by the number of organizational design principle examples from successful companies that you can adopt. This consists of establishing a chain of command, determining organizational elements and assigning resources.

All employers, irrespective of their profits or losses, must pay no less than their competitors and need pay no more if they wish to attract and keep workers.

Gore, a highly successful global materials science company that is focused on discovery and product innovation, has more than 10, employees, but only three hierarchical levels: Bigger organizations with a broad range of operational initiatives need mindful structural considerations to accomplish this optimization.

Factors influencing wage and salary structure of an organization

The Multinational Corporation Factors Affecting Organizational Design Although many things can affect the choice of an appropriate structure for an organization, the following five factors are the most common: Understanding which factors influence organizational structure is the key to choosing a structure aligned with your long-term goals.

Rules and guidelines are not prevalent and may exist only to provide the parameters within which organizational members can make decisions.

Factors Affecting Organizational Design

Once a firm has reached the maturity phase, it tends to become less innovative, less interested in expanding, and more interested in maintaining itself in a stable, secure environment. Variety indicates the number of exceptions to standard procedure but can occur in the team or work unit.

But the strength of these forces varies by organization type and within organizations by job clusters.Jun 29,  · The same internal factors that lead to an organization's success inevitably characterize that organization's relationship to the external environment in these broad areas.

Factors influencing wage and salary structure of an organization The wage policies of different organization vary some what. Marginal units pay the minimum necessary to attract the required number of kind of labor. Although many things can affect the choice of an appropriate structure for an organization, the following five factors are the most common: size, Factors Affecting Organizational Design.

organizations that operate in stable external environments find mechanistic structures to be advantageous. This system provides a level of efficiency.

Aug 06,  · Many companies at this stage don’t have a formal design, because business owners haven’t mastered which factors influence organizational structure.

Factors Affecting Employee Compensation

There are several internal and external factors affecting employee compensation, which are discussed in detail below. Factors Affecting Employee Compensation Internal factors: The internal factors exist within the organization and influences the pay structure of the company.

Organizational Structure: Influencing Factors and Impact on a Firm. Quangyen Tran. 1,2, Yezhuang Tian.

Factors Affecting Organizational Structure

1. External factors are those factors from the enabling en- it can design its struc- ture and encourage the development of cultural values.

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External factors influencing the design of organisational pay structure
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