1) Briefly describe Disney and its compensation strategy
In this report, I have chosen to focus on the Walt Disney Corporation to analyze their compensation strategy. The Walt Disney is an internationally renowned entertainment firm, operating various subsidiaries worldwide though it primarily operates in the United States and Canada. The head offices are located in the California and have approximately 200,000 employees. One of the best practices deployed by Walt Disney is that of being an equal opportunity employer. Employment conditions and pay rates are created and granted in the absence of religion, race, color, national origin, disability, and gender. The company deploys the flexible compensation strategy (Ferner & Almond, 2013). This means the salaries of Disney employees vary considerably because of benefits, experience, industry and location. Most employees are paid on seniority terms, so managers seem to take home more pay since they ensure the company runs efficiently and carry out particular job functions. The other members are salaried staff.
Compensation-related challenges they are facing
The Walt Disney Corporation is a global business entity. Being a global player presents unique challenges to the firm regarding employee compensation. The company faces diverse customs, political systems, laws, tax policies and economic climates, which only generate compensation problems (McDonnell et al. 2016). For instance, the existence of employee unions in the Australian market influences how salaries are determined because the unions and the government negotiate employee pay rates (Ferner & Almond, 2013). This applies nationwide. Still, in Hong Kong, the labor unions are prohibited, so the free market determines employee pay rates. Such different components between global communities affect Disney’s compensation strategy. As such, finding a balanced approach to determining a pay package is simply a nightmare for the company.
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2) How Disney applies compensation practice to determine the positive or negative impact
Disney’s compensation practice directly affects the company and its stakeholders, either negatively or positively (Le et al. 2013). Therefore, the kind of impact produced by this compensation practice indicates whether the practice is an equal and a fair pay system. If the employees are satisfied with the compensation system, they are likely to exhibit positive work behaviors and attitudes. Consequently, this will positively affect Disney’s effectiveness and performance. At Disney, an internal Board is primarily responsible for creating compensation practices (Tropman, 2001). This Board reviews the company’s compensation practices and plans annually. Further, the Board has designed aggressive strategies to establish the impacts of the compensation plans of the top executives, employees, and even stakeholders. Some of these strategies include the governance charters, which determine the effects of the compensation plans. Moreover, the Board regularly reviews the compensation policy and approves the incentives, benefits policy and compensation policy concerning all employees especially the top executives.
3) Ways in which laws, labor unions, and market factors impact Disney’s compensation practices
Various laws have been enacted worldwide to govern various aspects of employee remuneration and pay. Such laws include the Fair Labor Standards Acts that dictates equal remuneration for equal work (Le et al. 2013). Moreover, governments of different nations play a significant part in today’s workplaces through ratifying the Equal pay Act. In this view, the Walt Disney Corporation must adopt compensation practices that adhere to compensation laws, established both domestically and in international countries where the company functions. In other words, such regulations and laws could improve or undermine Disney’s compensation practices. Therefore, any compensation practice, which the company chooses, must abide by the law. This includes conforming in domains like minimum pay, compulsory leave and working hours for both temporary and permanent employees.
Today, most world nations have approved labor unions in their workplaces. These unions significantly influence today’s work lives and compensation practices of both unionized and non-unionized employees. In nations such as the US, labor unions have directly helped to boost employees’ bargaining power. In fact, these unions can potentially influence employees’ total compensation, wages, and salaries (McDonnell et al. 2016).
The compensation practices and plans deployed by the Walt Disney are directly influenced numerous market variables. Currently, the business world is characterized by groundbreaking technologies and information systems. This implies that Disney must set aside more finances for employee compensation. In effect, the internal Board evaluates the current compensation strategy to determine which yields greater employee motivation (Le et al. 2013).
4) The effectiveness of traditional bases for pay
Traditional bases of pay set compensation in a narrow way with regular annual increases (Tropman, 2001). There could be up to 3-pay increase annually. The company deploys the flexible compensation strategy. This means the salaries of Disney employees vary considerably because of benefits, experience, industry and location. Most employees are paid on seniority terms, so managers seem to take home more pay (Tropman, 2001). So far, this system has been effective since the company continues to dominate the industry for the longest time. In addition, most of the Disney clients are happy with the products and services offered. Disney has managed to attract different talents that help bring a new touch of creativity as far as product development is concerned. The higher n employee ranks, the greater the pay grade. This indicates the efforts that workers invest in their job roles while expecting some rewards in the form of promotions. This traditional pay base system helps Disney to spot the best-performing talents from the crowd and reward them via pay increase. Such privileges have served to keep the employees motivated towards achieving the overall company goals.
The success of Walt Disney can be easily traced as it has proven to be a dominant leader in the global entertainment industry. The company emphasizes the philosophy that success is solely attained via the individuals it hires. This is the reason why the company insists on maintaining top performing employees. Thus, Walt Disney understands that it would be impossible to persuade these talents to remain dedicated to the company without better pay.
References
Ferner, A., & Almond, P. (2013). Performance and Reward Practices in Foreign Multinationals in the UK. Human Resource Management Journal, 23, 3, 241-261.
Le, H., Brewster, C., Demirbag, M., & Wood, G. (2013). Management Compensation Systems in MNCs and Domestic Firms: Cross-National Empirical Evidence. Management International Review: Journal of International Business, 53, 5, 741-762.
McDonnell, A., Gunnigle, P., Lavelle, J., & Lamare, R. (2016). Beyond Managerial Talent: ‘Key Group’ Identification and Differential Compensation Practices In Multinational Companies. The International Journal of Human Resource Management. Vol. 27, 12, 1299-1318.
Tropman, J. E. (2001). The Compensation Solution: How to Develop an Employee-Driven Rewards System . San Francisco: Jossey-Bass.
