Professional Documents
Culture Documents
Running Head: Assignment 1: Compensation Practice 1
Running Head: Assignment 1: Compensation Practice 1
Running Head: Assignment 1: Compensation Practice 1
Name
Institution
ASSIGNMENT 1: COMPENSATION PRACTICE 2
Apple Company was incorporated in the year 1977 to manufacture, design, and further
promote the market of mobile communications. Besides, the company deals in the manufacture
of other media devices, such as personal computers and digital music players. However, the
company has absorbed other small companies, which aids it in mapping of the software and
applications used in the development of smart phones. Such small companies include Silicon
Valley and Novauris Technologies Ltd. Apart from manufacturing the communication devices;
Apple majorly focuses on developing and maintaining the software and applications used in
these media gadgets. Additionally, Apple provides a variety of products, ranging from iPods,
iPhone, iTunes, and Mac books. Consequently, many consumers of these products prefer Apple’s
products, simply because the company has a high profile in terms of customers’ satisfaction.
In Computer Industry, such as Apple, it is vital for the management team to constantly
review the stiff competition associated with the manufacturing of products. In these competitive
environments, the management team of Apple needs to set up strategies that balance out between
the freedom and creativity of employees. Therefore, the management team of Apple endorses
such reforms in order to control costs and efficiency in the company. In doing this, the Upper
Management Team set up some rigid rules that encompass the structuring of the organization in
the year 1992. Though the rigid rules looked promising in relation to safeguarding the company
against malpractices, many of these regulations occasioned challenges. For example, the top
managers provided the junior staffs with the specifications to which they were to adhere. By
ASSIGNMENT 1: COMPENSATION PRACTICE 3
specifying the kind of duties and tasks to execute, the management ensured that employees did
employees’ morale. The company offers more strict rules to employees, thus discouraging
workers from endorsing the kinds of creativity that comes with freedom. In particular, the upper
management receives negative feedbacks, resulting from their worse compensation plans.
Indeed, Apple Compensation Strategy needs some sorts of adjustments, regarding the way it
offers promotion to inexperienced managers. More so, the company focuses on developing and
promoting managers from outside, who are not well conversant with the company’s culture.
Apple has been hiring outsourced managers, who possess little knowledge related to
management as compared to existing employees found inside the company. These outsourced
managers have experiences of less than six years, working in large, multi-faceted companies like
fraternity, rather than evaluating employees based on their respective departments and lines of
specialization.
certain that Apple Company needs to restructure its organization, particularly in the field of
employees’ compensation. The company needs to alter its system of payment. For example,
many of its employees endorse the use of commission, as a means of payment. The use of
commission as means of payment acts as a motivation tool to the employees. Indeed, Sculley
looked into this method of payment, and further examined the benefits it attaches to both the
company and its employees. Categorically, this means of payment motivates employees into
ASSIGNMENT 1: COMPENSATION PRACTICE 4
working efficiently with the available resources to produce better quality products. Additionally,
it improves the productivity of the company since employees feel as part of the company’s
fraternity. In accordance with this kind of feeling, employees’ work performances improve
because the management team entrusts them with delegated responsibilities. Hence, the
management team involves them in meetings that entail making critical decisions, concerning
Apple’s strategies
that it compensates employees in line with their lines of duty. This measure is possible if the
company evaluates the performance of each worker individually, but not as a whole. In following
this approach, employees will have a feeling that the company desires to achieve its long-term
goals via their practices. Since the Research and Development Team works 80 hours a week in
coming up with new ideas, the company has to compensate different employees in relation to
Company needs to outline the bonuses in respective to the work performance and the number of
periods workers have performed their roles (Kapferer & Bastien, 2012). In contrast to this, the
QCD should evaluate the performance of the top senior managers based on the entire company’s
external analysis. In putting this into practice, the top managers receive their bonuses, regarding
the final work output and productivity of the company. Consequently, the QCD has to determine
the Average Profitability Index of Apple before awarding bonuses to the top senior managers.
Compensation for pay among employees working in Apple Inc. poses a challenge to the
management of the company. In this regard, the company’s CEO, Timothy Cook receives a
monthly pay of $4.6 million, which is a slight increase from the past salary packages (Walker,
ASSIGNMENT 1: COMPENSATION PRACTICE 5
2014). From this scenario, it is certain to say that the top most management teams in the Apple
Company get huge amount of salary packages at the expense of other lower level employees,
who do their best. Indeed, the lower level employees are the key players in ensuring the company
achieves its immediate and long-term objectives effectively. Therefore, the lower level
employees should also receive a handsomely amount in order for them to attain the required
level of morale, associated with improving the quality standards. Apple Company makes a lot of
By ensuring it surpasses its objectives, Apple discourages the employees from viewing
the company, as a profit-oriented firm, and instead changes their perceptions. In particular, it
endorses the hiring of young-aged employees, who seem to have fewer financial needs, such as
less number of insurance covers (Walker, 2014). Therefore, Apple experiences a challenge
attached to shifting of its compensation strategy. For instance, the company desires to increase
the working hours for the employees, but it is not ready to pay workers in relation to the
Analyzing how Apple applies its Compensation Plan in determining both the Negative and
Apple Inc. applies its compensation plans in accordance with the following factors;
namely, the Acts’ legislations, exempt and non-exempt jobs, attitudes and behaviors of
employees, internal employees ‘consistencies, and external competitiveness. First, the company
establishes the effects of adhering to the Legislations Acts on the stakeholders as having negative
impacts. Precisely, the industry views that it occasions some losses in case it stick to Salary and
Compensation Acts. Sticking to these rules means that the authorities prohibit the company is
from offering low pay to employees (Graham et al., 2008). Second, Apple determines how much
ASSIGNMENT 1: COMPENSATION PRACTICE 6
it pays its employees based on the exempt and non-exempt jobs. As an example, Apple pays
workers performing exempt jobs huge amount of salaries and bonuses because they have
outstandingly high skills and knowledge. Such exceptional skills and knowledge among top
management teams requires high pay, particularly for the company’s CEO.
Third, the company allocates compensation benefits to employees according to the kinds
of behaviors and attitudes employees possess. Employees who have better attitudes and morale
benefit a lot. According to Graham et al. (2008), these kinds of workers receive high pay since
they promote the profile of the company due to their excellent work performances. Thus, the
company’s stakeholders receive much praises from the entire consumers across the globe.
Lastly, the company awards its staffs compensation packages in terms of the attributed internal
consistencies in producing quality products, and achieving the targeted output. More so, it
evaluate s the competitive nature of the company in the market sector and determines how much
its employees should get. In case the company attains and maintains a highly competitive
perspective in the public domain, it is ready to add some bonuses and promote other lower level
staffs. Consequently, Apple practises these reforms based on how such reforms impact positively
How the Laws, Labor Unions, and Market Factors impact on the Apple’s Compensation
Practices
Despite the fact that Labor laws have impacted negatively on Apple Compensation
strategy, these regulations have somehow improved the working conditions of all employees. For
example, the Fair Labor Standards Act of 1938 restricts Apple Company from hiring minors,
who seem to have much of their time dedicated for the progress of the company. Besides, the
law suggests the minimum wages paid to employees, and further requires the company to pay
ASSIGNMENT 1: COMPENSATION PRACTICE 7
overtime workers an additional amount of money. In particular, the Act specifies that Apple pays
50 percent of their monthly pay for each hour an employee works overtime. Thus, this impact
negatively on the company since Apple does not have to make more profits, as a result of paying
employees less amount of bonuses. Market factors, such as customers’ tastes and preferences and
profitability indices, influence the decision of the company, regarding the compensation strategy
(Williams & Mueckenheim, 2005). To be precise, the company is obligated to maintain its public
image in the market; therefore, it offers a compensation package that literally attributes to the
performances of its employees. Besides, it perceives that the ultimate behaviors and attitudes of
employees are key factors that determine its public profile. Consequently, Apple sets up
compensation plans that correlate with the existing profitability index, simply because job
For many years Apple has been using its traditional means of payment. It uses Apple Pay,
which has features that synchronize with its products, such as iPhone 6 and Apple Watch. The
company’s means of payment is compatible with many of its applications. As an example, Apple
uses a tap and pay procedure, in which its employees have installed such software in their
communication devices. The Apple Pay is fast and convenient for both the company and
employees since Apple Payment Department monitors every transaction accordingly. Though it
charges a small fee every transaction, Apple Pay is convenient and beneficial to the employees,
as it provides the employees with the records of all transactions (Walker, 2014). It does this with
the help of the Near-Field Communications (NFC). NFC is a radio protocol that enables weak
radio signals to communicate, and have information interchangeably. Hence, employees enjoy
ASSIGNMENT 1: COMPENSATION PRACTICE 8
the Apple Pay, as they use the Touch ID on their iPhone, regarding the provision of the
authentication “thumb”.
ASSIGNMENT 1: COMPENSATION PRACTICE 9
References
Graham, M., Roth, T. & Dugan, D. (2008). Effective executive compensation creating a total
Association.
Kapferer. & Bastien, V. (2012). The luxury strategy: break the rules of marketing to build luxury
Walker, J. (2014). Information technology and collection management for library user
Williams, M. & Mueckenheim, J. (2005). Gale directory of databases. Farmington HIlls, MI:
Gale Group.