Continuing Case

:

Carter Cleaning Company
Establishing Strategic Pay Plan
Attracting ± Developing - KEEPING

Prepared by
Group Dynamic Kelvin Lye, Wong Shwu Fen & Masood

Case Details Problem No formal wage structure Not using rate ranges Not using compensable factors .

Case Details Not using rate ranges Wage rates ‡ Based on prevailing rates in the surrounding community ‡ An attempt by Jack to maintain some semblance of equity between workers with different duties Pay survey ‡ No formal pay survey ‡ Use want ads almost everyday ‡ Conduct informal survey among his friends in the trade association Pay Policy ‡ Paying 10% above what he feels the prevailing rates ‡ Reasons: 1. Reduce turnover 2. Foster employee loyalty His colleagues pay minimum rates .

Case Details Not using compensate factors ‡ Using informal policy of paying men about 20% more than women for the same job. Jack¶s Explanation? ³They¶re stronger and can work harder for longer hours and besides they all have families to support´ .

what would you suggest Jennifer do now with respect to her company¶s pay plan? . why not? Question 4 Specifically. and how could that be determined? Question 3 Similarly.Questions Question 1 Is the company at the point where it should be setting up a formal salary structure based on a complete job evaluation? Why? Question 2 Is Jack Carter¶s policy of paying 10% more than the prevailing rates a sound one. is Carter¶s male-female differential wise? If not.

Question 1 Setting up a formal salary structure based on job evaluation? Why? YES! Need to set up a formal salary structure based on job evaluation Why? .

Question 1 Setting up a formal salary structure based on job evaluation? Why? Why? High staff turnover Inconsistent pay rates compared to the market Different pay rates for male and female workers Needs for job evaluation ‡ Address issues regarding four forms of compensation equity among employees .

Question 1 Setting up a formal salary structure based on job evaluation? Why? Why? ‡ No mechanism of communication to address employees¶ problems regarding wages or salary Problem? No employee involvement in setting up salary structure No job evaluation committee What can this committee do? ‡ ‡ Maintain four forms of compensation equity among employees ‡ Employees can give different perspective regarding the nature of the jobs Ensure employees view pay process as transparent and procedurally fair .

religion and race Related to employees¶ capability and performance Skills Effort Working conditions ‡ Responsibility Maintain internal equity among employees .BACK Question 1 Setting up a formal salary structure based on job evaluation? Why? Why? ‡ ‡ No compensable factors Purpose? ‡ ‡ Evaluate and determine the relative worth of each job compared to key jobs Categorize / rank / classify jobs into rate ranges or pay grades Ensure no discrimination in terms of gender.

BACK Question 2 Paying 10% more than the prevailing rates a sound move? How to determine? Paying 10% more Attract more applicants for job ‡ Reduce turnover of employees who only concern about the salary rate Indirect financial payments and other factors also influence the employees¶ turnover Jack believes that it ‡ reduces turnover ‡ fosters employee loyalty ‡ ‡ ‡ Provide facts that employees are paid 10% more than prevailing rate Only loyal to high pay rate .

why not? Carter¶s male-female differential wise? Should be based on performance. not gender NO! ‡ Why? Disobey the Equal Pay Act (1963) Does not maintain individual equity Discrimination against female worker Inefficient pay plan .Question 3 Is Carter¶s male-female differential wise? If not.

BACK Question 3 Negative effects of male-female differential Not perform in optimum performance Effect for male Negative effects of male-female differential Effect for female More grievance Work stoppages (stop working as part of a protest) More arguments for pay rate Job dissatisfaction Increase in turnover Encourage counter productivity .

Jennifer and Jack shall take these steps to establish an efficient pay plan: Conduct salary survey Evaluate each job Group jobs Price pay grades .Question 4 Suggestions with respect to CCC¶s pay plan ‡ ‡ We suggest her to set up a logical pay plan properly . This process is time-consuming and may need further modification.

Question 4 Suggestions with respect to CCC¶s pay plan Conduct salary survey The best source of salary information in this case is: 1. Professional and governmental resources (with lower consideration) . Self-conducted Survey 2.

‡ It is very crucial to determine the employee¶s benefits. and etc. ‡ For each job in their company such as cleaner-presser.Second Step is to compare each job pay rate with other companies ‡ This is to determine the pay level of market (External Equity) 3.Question 4 Suggestions with respect to CCC¶s pay plan Conduct salary survey (Self-conducted survey) Since it is not their first time to be in the market.First step is to price benchmark jobs. which shall be compensated. . John and other managers are already familiar with the salary survey. they finding a benchmark to evaluate the value of the job to company is necessary 2. employee¶s have certain rights. So: 1. financial or spiritual rights. vacation payment. ‡ According to the Labor Acts.Third Step is collecting data on benefits such as insurance.

Effort 3. Education 6. Working Conditions 4. pressers is Point Method Definition 1.Question 4 Suggestions with respect to CCC¶s pay plan Conduct Job Evaluation There are various evaluation methods but the best job evaluation method for the job description of cleaner-spotters. Responsibility 5. Work experience The complexity of skill required for performing this job The level of physical or mental effort required The working conditions. environment and stress level The level of responsibility of the employee for the job The Level of education required for the job The working experience of the worker in related fields Relative weight 35% 35% 10% Total point 84 84 24 Minimum point value 42 42 12 5% 5% 10% 12 12 24 6 6 12 . Skill 2.

cleanerspotters and pressers in all branches in one Pay Grade. . Store managers in all branches in one Pay Grade. pressers and counterpeople As we know pay grades are comprised of jobs with similar difficulty or importance. cleaner-spotters.Question 4 Suggestions with respect to CCC¶s pay plan Grouping similar jobs into pay grades There are four main jobs discussed in the case: Store managers. hence: Counterpeople.

Question 4 Suggestions with respect to CCC¶s pay plan Price each pay grade by plotting wage curve The graph shows an example of wage curve for the store worker¶s cluster (cleaner-spotters and pressers) .

Acknowledgement Thank You! .

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