Brief Description
Apple is one of the traded companies in the U.S. that was started from a humble beginning by two young men who were friends. According to Tar (2013), the story of Apple all started in 1976 in a garage by Steve Wozniak and Steve Jobs. The two started this company, and in April they had their first product, and since financial aid was a challenge, they decided to sell a van and their calculators and managed to obtain about $1300 (Tar). In those days, this was a substantial amount as it propelled them to produce their first product, Apple I. After the production phase of Apple I, Wozniak and Jobs sold Apple I and their total revenue collected was $166,500, which was from their 250 units (Tar). They re-invested their profits into producing their next product, Apple II. This time around, the two decided to create a product that revolves around the mind of their consumers. Therefore, their next product was geared towards meeting the needs of those clients who were not in the business arena. As such, Apple II’s housing was made out of a beige plastic that was more appealing to their target market. One year after introducing Apple II to the market, they managed to raise sales revenues to $1 million (Tar, 2013, p. 3).
Like any other company, Apple faced numerous problems, but this did not hamper the growth of the company. Amongst the problems faced by Apple in 1988 included over ordering inventory, poor leadership, orders not being filled on time, and the falling out of investors. Such problems threatened the closure of the company, but things changed in 1996 due to their acquisition of NeXT. The company was founded by Steve Jobs and other executives of Apple in 1985 when they decided to bid farewell to their company (Tar, 2013). NeXT was succeeding because of their CEO, Steve Jobs whose leadership style managed to propel Apple back into the market.
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With its headquarters in Cupertino, California, the death of in 2011 saw the company's stock process dropping before stabilizing. Such occurrences show the positive impact Steve Jobs has had on Apple over the years. This multinational company has managed to fit well in the telecommunication industry through its production of customer-friendly goods and services such as personal computers, wearable technology, consumer electronics like mobile communication devices, and software. Globally, the company has opened several retail stores, and since technology has revamped business, they also have online stores (Tar, 2013). Moreover, it also boasts of having a sales force that deals with clients directly, third-party wholesalers, and even resellers.
Compensation Strategy
The company’s mission reads, “ Committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software, and Internet offerings .” Its compensation strategy has continued to give them a competitive advantage and also ensures operations of the company are efficient. The company and employees at Apple are all in broad agreement and the compensation strategy used is a way that binds officials effectively with their employees, both permanent and temporary.
Executive officers at Apple have managed to introduce three compensation strategies that have seen them compensate their workers for their job well done. The first package is that of long-term equity awards that are mainly in the form of “limited stock entities,” which is awarded to company officials (Galloway, 2017). Having such a compensation strategy has gone a long way in helping Apple improve their performance levels; financially even with the present challenges affecting the macroeconomic environment.
The second is that of cash compensation that is mostly used by many firms around the globe. Through applying performance-based cash incentive, Apple has managed to attain their objectives and goals. Furthermore, this has helped them fair well as it concerns their robust financial performance in the global market. Moreover, such cash compensations have seen employees at Apple work together in meeting organizational goals and objectives. Therefore, the compensation plan is positive about team building efforts.
The third strategy is that of base salaries, where the compensation committee meets yearly to determine the compensation of officers’ at Apple. This compensation platform is aimed at attracting and retaining executives who are team players, imaginative, entrepreneurial and gifted in their line of work. As such, the officials will be motivated to propel the company forward through using leadership styles that are competitive and fit into the diverse markets. For example, in 2009 Apple managed to realize growth for the company and obtained 12 percent increase in their revenue that saw them register $4.1 billion positive increase. Moreover, their net income was also increased to $5.7 billion, which helped them increase the total number of their stakeholders by 857 percent (Galloway, 2017). Having such positive feedbacks shows how well the compensation strategy works for the company regarding meeting their business goals and objectives.
Compensation Practices
The compensation practice applied by Apple has seen them acquire organizational effectiveness because the plan is fair and equal about all the efforts of all their employees. As such, the practice has brought about positive impacts to the company about its operations. The fact that the company assigns committee officials to determine the compensation plan shows their seriousness. As such, they are committed to changing the phase of their company when it comes to meeting the needs of their workers (top executives, permanent and temporary, stakeholders).
The idea of introducing officials has seen Apple impact the compensation positively because reviews of their compensation practices are carried out on a yearly basis. The reviews are not carried out to monitor the officials’ activities, but rather to acknowledge their efforts and compensate them for a job well done. It should always be noted that CEO’s positively impact the company’s financial base and should be appreciated (Carlon & Downs, 2014).
Compensation-Related Challenges
When we refer to a company’s budget, the labor costs are huge, but difficult to control such costs in some countries. This has posed a challenge for Apple especially for those countries that have tight economies. In some countries, Apple faces such problems, and they continue to widen the gap present between different technological companies (Tar, 2013). As such, labor costs escalate to great heights hindering Apple from creating efficient compensation plans for their employees.
Taking into consideration the fact that Apple is multinational; its operations are on a global scale. As such, their operations engage different countries, states, and personalities. Hence, the compensation plan put in place should be able to have a right balance that touches on the needs of all their employees irrespective of their nationality. Therefore, such compensation plans will mean that they will need to conform to the customs, laws, and traditions of these people (Tar, 2013). As such, they will have to go against the global corporate practices. This poses a challenge to Apple because they like adhering to all stipulated rules and regulations of trading.
Lastly, it is evident that creating a compensation plan that captures all employees of the company is hard and for Apple, this has been a major challenge. Especially because they want to attract and retain their new talented employees who will help them realize their company goals and objectives (Tar, 2013). Furthermore, the employees should ensure that they are in line with the mission and vision of the company. At times, the effectiveness of their employees is affected but poses a challenge because equality will not be fostered in the compensation plan. The management committee handling the compensation plan should always have a systematic approach to their engagement, but this at times poses to be a problem.
The other challenging aspect when it comes to attracting and retaining new talent is the increase in competition. These competitions have resulted in having labor markets that adhere to competitive salaries. Therefore, extra work for compensation committees at Apple. The plans in question will need to be competitive enough to retain and attract new talent to the company considering they will acquire qualified and high-end professionals (Tar, 2013). Such operations challenged compensation committees and remain to pose a threat to formulating and implementing compensation plans that are workable.
The Impacts of the Compensation Plan to the Company and Its Stakeholders
Apple applies its compensation practices to determine the impacts to the company and its stakeholders by looking at the effectiveness of the plan. The effectiveness measure should be able to accommodate fairness and equality, which it has and continues to foster in all its business operations. As a result, the satisfaction level of their target market is reached. This positively impacts on the performance of the employees. Moreover, their effectiveness is further advanced to ensure that they are getting fair recognition of their work in building the organization (Carlon & Downs, 2014). Evaluations made by committee officials have also been techniques employed by Apple in trying to determine the impacts of their compensation plans to their entire workforce. The plan serves a wide range of nationalities and states all at the same time. The officials ensure that the compensation plan is in line with the nation and state laws the company is operating in and makes them attain competitive advantage.
The Effect of Laws, Labor Unions, and Market Factors on the Compensation Practices
Laws are known to impact a company’s compensation practice by either undermining or improving the strategy put in place. As such, compensation plans and strategies put in place by Apple will need to conform to the laws and regulations of their given countries and states. For example, the law will need to conform to their employees’ needs such as the working hours put in place, leaves and the minimum salary awarded to all their employees. There are also times when companies request their employees to work overtime. Laws governing such cases require companies like Apple to formulate company’s strategies that encompass such working conditions.
Labor unions are bodies that represent employees, and they also look at compensations plans because they will need to incorporate both unionized and non-unionized workers of Apple. Such unions are known to positively impact the relationship between workers and their companies because they increase their bargaining power. As such, the workers are given the power to bargain such things as their salaries and total compensations amongst others.
Apple Corporation is also looking at market factors because they are known to affect their compensation strategies. Competition in the communication sector has seen Apple increase their financial compensation plans to attain competitive advantage. Through such activities, Apple has managed to retain and attain fresh and new talent in the company that comes with additional talent to add the pool of existing employees.
Traditional Bases for Pay at Apple
Traditional bases for pay are effective to Apple because it helps them perform market testing activities for their pay scale versus their competitors. Having such approaches in place brings out objectivity of the company; Apple’s compensation plan is made to be consistent and dependable in all weathers. Moreover, traditional bases are known to be consistent, and employees are more confident of the compensation strategy being fair (Lashinsky, 2014). As such, we can say that traditional bases act as platforms that help when setting up a comprehensible compensation plan.
References
Carlon, D. M., & Downs, A. (2014). Stakeholder valuing: A process for identifying the interrelationships between the firm and stakeholder attributes. Administrative Sciences , 4(2), 137-154.
Galloway, S. (2017). The four: The hidden DNA of Amazon, Apple, Facebook, and Google . London: Portfolio/Penguin.
Lashinsky, A. (2014). Inside Apple: How America’s most admired-and secretive-company really works . Dublin: Business Plus.
Tar, A. (2013). Apple SWOT analysis . San Francisco: GRIN Verlag.
