A compensation philosophy formally documents the company’s stance on employee compensation and creates a framework for consistency. With an official pay strategy, employers are transparent with regard to their compensation philosophy. Usually, corporate HR departments develop compensation philosophies jointly with the executive team. These formal documents involve corporate financial position, organizational structure, strategic goals, the industry, information and surveys on salary, headhunting approaches, and business conditions. The companies periodically review their compensation philosophies and modify them depending on the factors that affect the business. Ensuring a well-designed compensation philosophy is strategically important because it facilitates corporate strategic plans and initiatives, competitive outlook, business goals and operating objectives, and compensation and reward incentives. In practice, proper compensation philosophies identify corporate pay programs and reward strategies as well as the ways they benefit overall corporate business strategy, operating objectives, competitive outlook, and human capital needs. At that, sound compensation philosophies strive find the best talents available on a marketplace, motivate employees and make them perform to the best of their capacity, reward best-performing employees (Maersk, 2014).

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The Maersk Line Company is a global representative of A.P. Moller delivering global marine transportation services. Since 1904, the company has turned into the largest and the most reliable container-shipping carrier of the world with a vision emphasized on business expansion. As a division of the A.P. Moller, Maersk Group shares corporate values and business principles. Maersk Line prioritizes on responsible procurement, respect for labor rights, and sustainable marine environment. According to section 139 of the Danish Companies Act applied to listed companies, Maersk Board of Directors adopts general guidelines for the company’s incentive pay envisaged for the board of directors and the management board (Maersk, 2014).

The corporate compensation philosophy concentrates on “constant care” ensuring health and safety of its employees. The company values uprightness and humbleness as well as the preservation of the good name of the company. In its HR practices, the company adheres to the Equal Employment Opportunity Law in the process of hiring candidates. The company pursues zero-tolerance to all forms of discrimination while hiring and working with employees. The company utilizes employee referrals as an internal recruiting method identifying potential candidates through social networks. The scheme inspires existing employees to choose suitable candidates for a particular job in social networks. Referring employees then receive a referral bonus as a reward. This way, the company implements efficient and cost effective recruitment philosophy. The company periodically reviews every employee’s performance to generate promotions and assign bonuses (Maersk, 2014).

The corporate compensation philosophy assumes inner HR procedures towards individual employees. Maersk regularly checks the employee’s attendance and whether it is exemplary. HR managers report on the quality of individual performance and their impact on departmental productivity and morale. The company assesses employees’ attitudes towards the department, corporate values and their place within the company. It is vitally important for an inner organization to understand whether employees feel in Maersk like at home. This helps HR managers recognize the flexibility of their employees and readiness to perform specific tasks beyond their usual duties. Inner communication between the managers and employees at Maersk is therefore strategically important helping the company to solve many problems and soften any controversies and misunderstandings. Maersk strictly monitors everyone’s ethical behavior and privacy issues. Part of the corporate compensation philosophy consists in assuring that every employee consistently meets project deadlines and productivity requirements. At that, customer feedbacks are rather important for the company.
It is of utter importance to determine the employees who are especially in critical situations. This overall determines individual competency (Maersk, 2014).

Compensation benefits at the Maersk line consist in careful maintenance of the equality among the employees who are protected against equity issues. Actual salaries and wages depend on educational level, professional experience, market circumstances, and individual capabilities of every single employee. Employees receive pay raises on annual terms. HR department agrees the salary rate individually with every candidate on their terms and conditions when positions are highly skilled. This is also the case when Maersk strives to retain loyal an employees or an employee is utterly productive and effective for a company.

Maersk deploys various performance appraisal approaches. MBO consists in assigning every employee with specific tasks and goals. HR managers periodically review the progress of due performance. Global organizational goals consist of minor departmental goals and individual goals of the staff. Paired ranking approach consists in ranking employees by splitting employees in pairs selecting the best one in every pair. Forced distribution method consists in identifying specific performance categories, for example 25% high performers; 10% high-average performers; 15% average performers; 10% low-average performers; and 10% low performers. The employee appraisal involves Employee Development Report-1 and 2. The Report-1 determines Key Performance Indicators, while the Report-2 rates individual employee performance by quoting considerable performance successes and deficiencies during a current year. This is to identify the areas of improvement for the future. Depending on the outcomes, every employee receives respective training and development facilitation. Overall, Key Performance Indicators provide sustainable background for granting promotions, rewards, bonuses, and incentives. The same indicators are the grounds for layoff, fines and punishment of individual employees (Maersk, 2014).

  • Maersk (2014). “Incentive Pay Guidelines,” retrieved March 18, 2016 from http://investor.maersk.com/guidelines.cfm
  • Maersk (2014). “Our culture and values,” retrieved March 18, 2016 from http://www.maersk.com/en/people