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Organizational Objectives and Total Compensation

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Organizational Objectives and Total Compensation in Different Markets
Sheila E. O'Kane
HRM/324
March 25, 2013
Ken Zula

Organizational Objectives and Total Compensation in Different Markets
An analysis of current laws and regulations on organizational objectives and total compensation is the purpose of this paper. As a Human Resource consultant the primary objective is to provide the client’s organization with the information knowledge of the laws and regulations that impact compensation. Armed with this knowledge the organization is able to develop a total compensation plan that is in alignment with the firm’s strategic plan. The laws that influence compensation practices are designed to help “ensure that pursuit of goals by any one group does not undermine others’ goals” (Martocchio, 2009, p. 49). These laws make sure that the employees who have the “least amount of power” (Martocchio, 2009, p. 49), are protected.
The client organization has 200 employees and provides goods and services to the federal government under contract. There are several laws that the organization must adhere to as a federal contractor that affect total compensation.
The most prevalent affect comes from laws surrounding wages. These laws fall under the heading of Prevailing Wage Laws. One such law that applies to the client organization is the McNamara-O’Hara Service Contract Act of 1965. Contractors who employ service workers such as plumbers and electricians must pay “at least the minimum wage specified in FLSA” (Martocchio, 2009, p. 55). If the firm’s contract with the government is valued at $2,500 or more the firm must also pay the prevailing wages of the area, and fringe compensation that is “equal to the local prevailing benefits” (Martocchio, 2009, p. 55). Another law that the firm must be aware of is the Walsh-Healey Public Contracts Act of 1936. This act covers “all of the contractors’ employees except office, supervisory, custodial, and maintenance workers who do any work in preparation for the performance of the contract” (Martocchio, 2009, p. 62). If the value of the firm’s contract with the government is $10,000 or more the organization must adhere to the guidelines that address “wages, hours, child labor, convict labor, and hazardous working conditions” (Martocchio, 2009, p. 62). Organizations in the same industry but not engaged in a government contract are not subject to these regulations.
Based on these two laws alone total compensation for two organizations in the same industry, employing the same number of people, could differ greatly. Firms that pursue and engage in government contract work must be keenly aware of these and other employment laws that they are subject to by virtue of the contract. Failure to conform to these regulation can result in the losing the contract which can seriously cripple a company.

Reference
Martocchio, J. J. (2009). Strategic compensation: A human resource management approach (5th ed.). Upper Saddle River, NJ: Pearson Education.

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