ZENITH

(Formulating the Compensation Strategy)

COURSE: STRATEGIC COMPENSATION

Course Code/Section: HRPD 405-102

Course Instructor: Wood, Eileen

Contributing Students:

SR. NO. NAME STUDENT ID NUMBER

1. Singh Paramvir 300643655

2. Akindipe Vincent 300632516

3. Yadav Prakash 300633228

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 INTRODUCTION

In this assignment one is going to identify the major problems of Zenith Medical System
Incorporated, Problems which are related to the company’s compensation system and
compensation practices. And also one will analyze that how the Zenith Medical system
incorporated’s compensation system and practices caused those identified problems. Later in the
assignment part B, one will recommend solutions to the problems which have caused those
problems. One will determine and recommend solutions related to company compensation
system and also strategies. One will also discuss that how company can implement those
strategies and solve the current identified problems. One needs to explain and also justify those
strategies which have been recommended for the compensation system. In the end of this
assignment one will also develop a pay for knowledge plan for the company. Author will also
create job families for the company will recommend compensation strategies for each job family.
In the end author will create a job evaluation plan based on “point method” and follow with the
conclusion.

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 DISCUSSION

Identification of Current Organizational Problems and Analysis on their root causes.

Zenith Medical System incorporated was established in year 2007 by the joint venture of a Major
computer firm and a leading supplier of leading Hospital products. Both firms has invested equal
amount of capital in this venture. The top management of Zenith has been appointed from both
parent companies, however the majority of the Top management has been appointed from the
Hospital products firm. Even the CEO of the company was originally working in the Hospital
Product firm. The logic behind this Idea was that the new venture is going to deal with medical
products therefore it was understood that Managers from Hospital products firm would have
more experience related to Hospital products then managers who work in computer firm. The
product which Zenith produces is Information management systems for health care institution, as
health care institutions need more and more sophisticated database information system to work
more effectively and efficiently. The health care institutions have got more complex and they
need information system to keep all the records of their employees and customers. Zenith
produces one system which has integrated several different kinds of systems, which includes
patient records, systems which help for scheduling staff and facilities, for material management
and also for the medication tracking. Also includes systems for the financial purposes of an
organization. Zenith product is a very important product to the market as it is very important for
medical purposes to transfer the information from one party to another, so that they can work
more efficiently and if in some cases parties does not able to transmit the info to each other; it
can cause a death of the patient. Zenith produce the medical products, they handle everything
from system design to installation, training and maintenance. The head office of Zenith is
situated in Ottawa and 5 regional offices are situated across Canada. There are total of 600
employees working for Zenith from which half of them works in Head office and rest of them
are dispersed equally in 5 regional offices across Canada.

Many companies tend to practice the mix of three main types of managerial strategy either
consciously or unconsciously, depending on their underlying assumptions about the nature of
employees Zenith is using Classical managerial strategy, because the firm feels that the

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inherently dislike the work and they only work for money. Under classical management, jobs are
narrowly defined (which makes training, supervision and employee replacement easy),
employees are controlled through procedures, policies and rules enforced by a hierarchy of
management, and most decisions are made at the top of the hierarchy (ONLINE)
(www.stockoptions.org.il). As we have seen the case study Zenith has easily replaced the
employees and provides rewards only to the individuals who perform well. The firm is providing
only extrinsic economic rewards related to individual output. For this kind of strategy, planning
can adapt to and anticipate market change. Zenith is paying base pay plus large bonuses to their
employees even though the company is not doing well from last 2 years. The employees of the
company have individual performance pay system. In which each employee has been rewarded
on their individual performance.

Zenith needs to use the high involvement managerial strategy so that workers in the organization
can be motivated by needs for interesting work, challenge, autonomy, personal growth, and
professional development and also employees can exercise self control once zenith will provide
these conditions while treating employees fairly and equally. Also High involvement managerial
strategy will help zenith to enable its management to confront increasing global competition
whilst providing opportunities to workers for greater rewards and security, as well as the intrinsic
satisfaction that employee involvement offered. This will have an overall effect on the corporate
strategies of the organization because workers will be attract to intensive training geared towards
team working, functional flexibility and idea generation and information sharing, particularly
about the economics and market of the business(ONLINE) (www.ddiworld.com).

In year 2008 the sales of Zenith dropped down to $58,000,000 and which produced the net loss
of $1,000,000. Management was not very concerned about this thing as they assumed that this
kind of problems occurs initially in any new organization and these problems will be resolved
with time. Management thought if revenue will be increased then it will have a positive effect on
profits due to which these problems will disappear. However, Sales of 2009 were way below
their expectations, the total sales for 2009 dropped down to $50,000,000 with the net loss of
$5,000,000. After that Company start facing serious problems with their quality for the products.
Customer starts complaining about that the systems that they do not work as promised by the
marketing/sales department. The systems were installed late and have system crashes often also

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the maintenance department seems to show very little enthusiasm for fixing these problems. The
company is using the pay for performance compensation strategy, where each individual gets the
base salary plus some incentives on top of it. According to us this strategy is not a good fit for
this organization in this particular time because this way the company has been divided into
promotions and contests, the employees in the company are not working with the same vision.
Incentive programs create competitiveness, and that's not necessarily best for a company like
Zenith which is still at its growing stage. It is not necessary that people are always motivated by
rewards and bonuses they can be motivated because they're excited about their jobs or because
they're doing something that provides a service to the world. Motivation is very important to
develop commitment amongst workers in an organization. Herzberg constructed a two-
dimensional paradigm of factors affecting people's attitudes about work. He concluded that such
factors as company policy, supervision, interpersonal relations, working conditions, and salary
are hygiene factors rather than motivators. Osteraker supports that “An examination of the
values, as well as a general understanding of the needs that influence motivation, help to
understand the factors which motivate the employees of a specific occupation”. According to the
theory, the absence of hygiene factors can create job dissatisfaction, but their presence does not
motivate or create satisfaction (Herzberg, 1959).

The sales team got affected the most because their sales have been decreased because of the bad
market reputation, which made them make more promises to the customer to close the deals. The
marketing team has to promise for extra features in the systems in comparison to the market to
make customers. As the marketing representatives base pay was set low and their pay was all
based on their commissions which depend on the total value of system contracts are signed.
There was decrease in company revenue in the sense that there were so many problems with all
the departments, most of the deadlines given out to customers were not met and the ones met did
not reach customer specification. This led to low reputation in the part of customers making sales
reduced. These problems are caused as a result of compensation system on the part of the
company. Most sales staffs were paid on commission basis and they were not satisfied with
them.

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Company start facing several different kind of problems, firstly all employees start focusing on
their own jobs, hardly any employee feel little need or desire to cooperate with workers from
another departments. This clearly shows the environment in the company is begun to be
Individualism, there is no team work and employee has no motivation to work together in the
team. In fact employees start assuming that other department do not do their job properly and
because of them company is facing problems. Because of the entire problem, this leads the
company to poor relationship between departments. The above mentioned problems occurred
due to poorly designed reward system in which each department are paid bonuses and some are
not paid lead to a situation whereby employee focus on their own job feeling little need or desire
to cooperate with other departments. It also leads to a situation whereby different departments
tend to blame each other for their own lapses. This causes relations in all departments to be very
bitter and personnel in each department try to avoid talking to any one in other departments
unless absolutely necessary, these leads to a lot of problem in the company. There was decrease
in the morale of sales staffs because they were not majorly having high sales like they used to.
The sales staffs are paid majorly by commission meaning the higher they sell, the higher they
earn. If they make more sales, they earn more. The problem due to the inability of the company
to meet up with customer satisfaction led to the company losing its customers and makes it more
difficult for them to get more customers. The moral of the sales force which was high at the
beginning dropped because they were not able to gain more customers, get new projects and
finally they end up getting little bonuses.

Secondly, the morale is generally low in all the departments of the company. Each department
blame other department for being incompetence. For example, system development department
blames the marketing department that they do not understand or convey the requirement of the
customer properly. By the end of the second year system development department faced more
difficulties to meet their targets. Because the systems which were promised by the marketing
department were fancier in terms of extra features in order to attract the customer and close the
deals. Therefore it was almost impossible for the system development department to meet the
target as there was no increase in the cost to the customers and also there was increase in time
and hours budgeted for each system. By the end of the year system development literarily could
not meet their client timelines and consistently over budgeted hours.

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Thirdly, system installation department usually does not receive the systems from the system
development departments on time because of the above mentioned reasons. Because of this
system installation targets are never met and when system installation staff reaches to install the
systems, they have to face the client’s misbehaviour. Since the new system installation manager
saw the problems with not meeting the target deadlines, he decided to install basic systems
within targeted time; He said that we will worry about the extra features on the system after
installing the basic system. He also thought that extensive system testing is waste of time,
including staff training, extra expense therefore he cut off all the unnecessary things and with
this he was able to bring in some projects under budgeted hours. However by doing these
customers who were promised with the fancy system features did not get what they actually
required and this lead to a decrease in customer satisfaction.

In general there are three kinds of employee behavior which is important for the firm. The first
of these is membership behaviour, the second of these is task behaviour and the last one is
citizenship behaviour (Long, 2010). The employees of Zenith particularly show the Task
behaviour which simply refers willingness of employees to perform their assigned tasks. Zenith
is practicing the classical managerial strategy in which they want to control and reduce the turn
over costs and because of the tight control exercised by the firm the employees has very little
scope for citizenship behaviour. The employees at Zenith do not have freedom to take decisions
and supervised directly under the supervisors. In order to increase employee performance Zenith
needs to introduce high involvement managerial strategy which will lead their employees to
practice high levels of membership, task and citizenship behaviour for its success. And the
Zenith needs to make a compensation system to achieve this kind of employee behaviour within
their organization. To achieve this behaviour Zenith need to apply Skill-based pay which
provides an incentive for employees to develop broad skill sets, allowing flexibility of workforce
deployment. Group performance based pay changes the focus from individual self-interest to the
interests of the group or team. Organization performance-based pay provides the incentive to
look beyond departmental interests to the good of the organization as a whole. Use of group and
organizational pay plans also plays a role in assuring employees that they will share in the fruits
of their labour.

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 Recommendations for solving the problems

If a company wants to get what they expect from their workers, than company has to provide
what worker expect from the company. The strategic-management process does not end when the
firm decides which strategy or strategies to pursue. There must be a translation of strategic
thought into strategic action. This translation is much easier if managers and employees of the
firm understand the business, feel a part of the company, and, through involvement in strategy-
formulation activities, have become committed to helping the organization succeed. Without
understanding and commitment, strategy-implementation efforts face major problems (ONLINE)
(http://www.flexstudy.com). According to our group Zenith has failed to clear their objectives to
their sales and marketing employees, for example sales executives were never sure what to sell,
what to advertize and specially what is their unique strength. Zenith should use profit sharing
compensation strategies, which will bring groups of employees to work together toward a
common goal (the success/benefit of the company), it will help the employees focus on
profitability of the organization, and company will not have to worry about the cost to implement
the strategy as it will be directly connected to company’s performance. However, in current
situation Zenith is not making any profits therefore in this event Zenith should introduce
performance pay compensation strategy for a time being in order to increase the company
income and at the same time employees will get encouragement to perform well. Each employee
needs to be covered under profit sharing compensation strategy and author will discuss further
that what additional strategies will work for an individual departments. To keep the sales
executives on track, company needs to design sales compensation strategy which should tie with
sales compensation goals to the business objective of the company in direct way. Zenith need to
establish annual objectives, which is a decentralized activity that directly involves all managers
in an organization. Annual objectives are essential for strategy implementation because they
represent the basis for allocating resources, determine a primary mechanism for evaluating
managers and also are the major instrument for monitoring progress towards achieving long-term
objectives(ONLINE) (http://www.cirano.qc.ca). Firstly, company need to train their sales
executives to identify their major responsibilities, accountabilities and goals. At the same time
the sales managers need to understand their particular roles, in which he or she has to be
responsible for communication and administration of the sales executive which will be

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determined by conducting frequent performance audits of sales executives. Zenith need to
discuss performance measures with their sales executive, they need to explain them that on what
basis their performance will be evaluated. Often profit which is made by employees related to
marketing is the major part of the revenues in sales department. Zenith need to tie sales
executives in the overall business plan of the company, which will motivate sales executives to
achieve their sales revenue. The major problem which our group has figured out that, Zenith
compensation strategy for their sales executives had many loop holes in them, for example sales
executives only focused on individual sales, and the criteria for measuring their performance had
a major setback, for example sales executives only focused on finalizing deals, whereas they
should be measured on other factors such as, what have they offered, what time frame they have
mentioned to the clients, if that time frame is in actual achievable by Installation department,
what kind of feedback client has given on finalizing the deals with marketing/sales department.

In order to bring up sales and also motivate employees, Zenith need to clearly define sales
expectations and goals that are realistic but challenging. Zenith need to introduce commissions
which are tied to short term as well as long term goal attainment. Managers in the sales
department then need to track and accurately measure performance against expectations of each
sale executive and also a whole team. Zenith need to implement a compensation strategy which
rewards achievement with competitive compensation and motivational features that provide a
Win/Win for both the company and the sales department. Also while implementing short term
goals attainment strategy, company need to implement incentives/bonuses tied to annual sales
results. Managers need to monitor the results on a regular basis and modify the plan when
needed and the most important keep an individual sales executive informed about any updates.

System development department also face problems in there department, they were not able meet
clients timelines for most of the systems and also they were consistently over budgeted hours.
Managers are paid base salary plus a large bonus if they meet or exceed the target, however non-
managerial employees receives base pay plus indirect pay. According to our group we strongly
believe that system development executives should get base pay, indirect pay plus incentives on
the number of systems developed by each team. The higher the incentives available for any
particular job, the more dedicated the staffs tend to be. There should also be a specialised
guideline for developing systems; a particular number of days to develop a particular system

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should be put into place, the more complex it is to develop a system, the longer the hours
assigned to the job. Simple systems requested for by the customer should take only little time to
work on. This should be a base for their compensation in terms of bonus and indirect pay. This
will also reduce the number of hours wasted during system development. Managers should also
be held responsible for the action of their team members and ensure that targets are met. This
will motivate the employees and make them work in teams to achieve their targets so that they
can earn incentives. Zenith should introduce strategy where an individual effort will count by
producing each number of system parts and also company should establish a performance
“threshold” for system development department to qualify for incentive payments overall.
Managers should clarify every individual their each responsibility, importance in their teams and
create shared commitment in that every individual contributes to organizational performance and
success. As Zenith is facing major problem with their system development department, this
department handles core work of the company as they design systems as per the client’s
requirements. System development department has certainly heavy responsibility on their
shoulders because of this our team believe system development executives should get bonuses
and criteria of bonus should be set for cost reduction and quality improvement.

System installation department faced problems majorly because they do not receive systems
from system development department on time. Managers get a base salary and get large bonus
based on meeting or exceeding their targets. System installation department work as a team and
company should introduce team incentive payments for which company need to set performance
measures upon which incentive payments are based. This way teams will be more motivated
towards their job and will put their full effort to install the systems on time. However from the
study one cannot find any flaw in the system installation department as their performance has
been directly hampered by system development team. To rectify this error, our team has come to
an idea that System development department should have a sub department, which will be called
system development review. In this department employees will be responsible to check the
compatibility between system requirements sent by the marketing department and system
development department. The main purpose of this department will be to determine whether the
requirements which has been sent by the marketing department are achievable or not and if yes
then how long time will it take to develop the system. System department will review the order
and make a report and send back to marketing department, so that they can communicate with

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the customer and give then realistic time frames upfront. With the help of this department, our
team believes that there will be fewer conflicts and orders will be reviewed and right information
will be given to the customers. Like this the customer satisfaction will also be increased. Also
Zenith needs to implement spot bonus plan in their company to reward individuals at times. By
keeping this thing in mind employees will use their full potential to perform outstanding to be
able to get spot bonuses.

System maintenance department has faced lots of problems, as it is the last stage of the operation
cycle, due to improper marketing, missing deadlines by development team, just basic systems
installed by installation department creates whole mess for the maintenance department.
Employee in maintenance department has to face the customer unpleasant behaviour. This
department has faced the highest employee turnover. Maintenance department managers a paid a
base salary plus a bonus based on a percentage of the extra revenue the department generates. As
we can see since company has started producing systems, since then company is in loss and
therefore maintenance managers have not made any bonuses. On top of it system maintenance
department faced major problems with the client, as they have to face the clients personally when
they go to fix the problems even though they have not caused the problems they are always the
one berated by panicky, frustrated, angry customers. Therefore, we believe that system
maintenance department need to get good base pay, indirect pay and Incentive plan. The
incentive plan has to be made in such a way that it should measure the performance on each time
system maintenance team will work out and solve the customer problem. By implementing this
strategy, maintenance department team will highly motivated to solve the client’s system
problem regardless of they are being angry. The team needs to be awarded on the number of
problems they have been resolved in one visit. Such target measures needs to be set that for
employees they seem to be achievable and make them feel worth combating the angry clients.

As discussed earlier once the system development review department will be in place then the
problems will certainly be decreased for the system installation department as well. Because the
root cause of the problems has been arise from the sales/ marketing department. Now system
development review department will keep control of orders sent by marketing department to
system development department. This department will certainly help to reduce the functional
problems and will definitely help to increase customer satisfaction.

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 PAY-FOR-KNOWLEDGE PLAN

Pay-for-knowledge plan is consists of two categories, first it has competency base pay which
increases with an individual competencies while at work, it consists of time an individual has
spent in an organization. Individual competencies develop with time while working in an
organization, however on the other hand the second category is skill base pay which does not
require as much time as competencies need to develop. It is easy to get skilled employee rather
than employee with competencies or in other words knowledge which he or she has gained from
her work experience in a particular field. Zenith should encourage system development, system
installation employees to learn as much as they can about their career by compensating them for
learning new skills about their job and the company.  Paying employees based on job knowledge
is not necessarily for the task he is assigned to, but it is based on what he learns to enhance more

skills and knowledge of additional tasks. By paying pay for knowledge will not only benefit the
employee but it will also help Zenith because once the employee learns all he can about his job
and the company, he becomes a part of the organization. This will help to hire, maintain, and
retain employees who will be a contributing factor to the mission and goals of the organization.
The more Zenith will encourage its employees to enhance their skills as an employee, the greater
morale, turnover, absenteeism, and productivity will improve overall in the company. Our main
reason for choosing a compensation mix which is based on performance is because there is a
high decrease in employee morale in Zenith Medical services due to the practice of paying
bonuses based on the number of contracts signed which is seen as meeting sales targets and this
lead to the development of employees behaviours that are not beneficial to the organization.
Therefore the use of performance pay plans that are properly designed will signal key
employees’ behaviours and motivate employees to achieve them.

Our pay-for-knowledge plan has 4 levels of pay. Level one is the level at which the employee is
hired, The person progresses level two when that person has learned to perform a sufficient
number of jobs in that work team to be considered a flexible team member so that the person can
move around and share work with other people, replace other people when they are absent, level
three is when the person has learned to perform all of the jobs in a team in a satisfactory manner
and the last level, which is level four, is a team coordinator or team leader type level. Typically,

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only one employee on the team can be designated as a team coordinator and the team is usually
the one that designates which team member can function as a team leader. However, Zenith
should keep marketing department out of this grid. The compensation for marketing department
should be based on base salary plus a certain amount of percentage based commission on the
number of sales per employee in market department has done. In addition the starting salary of
the marketing department employees should start from $1100 as a base salary and percentage of
commission made on actual sales done by an individual. For example, a threshold target needs to
be set and upon achieving 50% of the sales the employee should be eligible to get $300
commission in his salary. On the top of it, the commission of $500 should be available for each
team member as a team performance bonus. This compensation mix will maintain a healthy
relationship between employees and will also motivate to achieve their targets as well as teams
target.

System development System System

Installation Maintenance

Level 4 Expert in programming of Analyze system Expert in trouble

financial, material, requirements, plan shooting, determining
medication, record, hardware layout of new system requirement
scheduling system section the new system and changing hardware
$2800 $2800 $2800
Level 3 Intermediate in programming Initiates tests of Able to determine the
of financial, material, systems and problem with new
medication, record, application programs systems and fix the
scheduling system section and module interface problems
$2400 $2400 $2400
Level 2 Able to process financial, Able to install basic Able to fix problems
material, medication, record, systems and with the basic systems
scheduling system section application software Installed
$2000 and test software $2000
operations
$2000
Level 1 Apply basic knowledge of System installation System maintenance
computer plus entering data training section, training section
codes conducting training conducting training
$1800 sessions sessions
$1800 $1800

Skill Grid for Zenith Medical System Incorporated’s (Figure: 1.1)

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In figure 1.1, one can notice that the initial basic pay for the system development will be only
$1000 because in this level an employee has to use basic knowledge of computer plus entering
data codes into the systems. After minimum of twelve months of time frame, an employee will
step into the level 2 depending on the performance in which one has to able to process financial,
material, medication, record and scheduling system section. The basic pay of an employee will
get the raise of 20% and will have to stay in this level for minimum of one year time. After this
an employee will then go to the level 3 in which one has to do the programming of the financial,
material, medication, record and scheduling system section. An employee develop his or her
skills step by step in this department as the work done in this department is the core product of
the company and one has to get well trained to keep up the quality of the systems made by the
company. The third level is also called as intermediate level of system development. After this
level one has to go to the level 4 stage but to get qualified for this level one has clear
examination. In level four an individual is fully trained in the integration, applications and
programming of the systems. An individual get expert in system development and will be
eligible for the pay raise and the salary of an individual will go up to $1800. It is understandable
that when an employee gain more experience and get expert in their job that employee becomes
more valuable asset to the company. To retain the experienced employees company has to train
their employees and promote them according to their abilities.

In System installation department the new employees have to go through hardcore system
installation training as the system installation is a very vast and complex process. An employee
has to go through the training period 3 months in which one has to conduct several training
sessions. Once the training is done and employee has to do practical training, which is sometimes
called on job training in which new employees need to install systems under the supervision of a
supervisor or a senior system installation executive. After spending minimum period of one year
employee is then eligible to step in to the level 2 an employee gets the pay raise of 20% of the
base pay. In the level 2 employees must be able to install basic systems and application soft
wares. Also they must know testing the software operations. An employee has to spend
minimum of one year time in level two. After completing and getting expert in level 2 employee
then promotes to level 3 in which an employee must be able to test the installed systems and
must be able to test application software module interface. In this level an employee get the raise
of $200 on their base pay. After minimum of two year time in level 3 and employee is eligible to

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take examination to step into level 4, in which an employee should be able to analyze system
requirements and should be able to plan hardware layout of the new system. In level four an
employee gets a raise of $400 on the base pay.

In system maintenance department the entry level employee also has to go through a hardcore
training as their job is the most important job in the organization. As they are the one who needs
to know each and everything about the system. They need to know what does the system do and
how to operate the system. The entry level employees get the base pay of $1000 and after
spending 3 months of training period plus one year working under the supervision of supervisor
in level one, they are eligible to move to level two. In level two the employee should be able find
and fix the problems with the basic systems installed. The employees need to learn each and
every part of the basic systems installed. The base salary of an employee in level two will get a
raise of 20% of their total base pay. After completing one year in level two an employee than is
eligible to step into level three, in this level system maintenance employees must be able to cope
up with the problems of new systems installed which are much more complex then the basic
systems. Also an employee will get the raise of $200 in its base pay. After completing the level
3, an employee is eligible to take examination to step into level 4 after being in level 3 for
minimum period of 2 years. The level four employees should be able to trouble shoot and
determine the new system requirement with changing hardware. In this stage an employee if
fully trained for his job and should be able to cope up with any kind of problems with the system.
The base pay of an employee goes to $1800. From figure 1.1 one can find out that the pay for
knowledge plan consists of defined progression of paths through the skill level blocks,
specification of minimum time frame, training, Rate of pay for each skill block.

COMPENSATION STRATEGY

Zenith need to concentrate on the job families to apply the appropriate compensation strategy.
According to the text book job family is defined as “A job family is defined as a series of
progressively higher, related jobs distinguished by levels of knowledge, skills, and abilities
(competencies) and other factors, and providing promotional opportunities over
time”(Long,2010). A job family is a series of jobs involving work of the same nature, but

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requiring different levels of skill and responsibility. For example in a restaurant a waiter is hired
to complete the daily tasks and duties. A waiter can be a high school graduate student who has
very little experience, whose skills are being developed and who would be given responsibilities
at a lower level than those with experience. On the other hand the senior waiter which is also
called head waiter would be one with many years of experience whose skills and competencies
are fully developed and who completes the job duties of high level. Thus, the value of the waiters
varies widely based on the experience, competencies and the responsibilities he or she has. The
main purpose of Job family is to improve competencies of the workforce through better selection
and placement and it also help to increase training and development participation of the
employees. Zenith need to determine the job family so that they can increase the retention of
competent employees and also it will help to improve an individual employee’s performance and
contribution. Determining the job families has a huge impact on managers to make staffing
decisions which allow flexibility to managers to assign job duties.

Job Family Names of the Job included in the Job Family

Administrative job family Secretary, Clerks

Communication job family Marketing and sales

Application programmer job family Junior, intermediate, senior application

programmers
Specialist professionals job family System Installation, System Integration,

Systems Marketing specialist

Leadership job family Directors, managers, supervisors of all

departments
Human Resource Job family Compensation clerks and officers

Job Families Table (figure 1.2)

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Our team has made a table of job families for Zenith, in which one can see that there have been
six job families. And under each job family certain number of jobs has been listed. The first job
family is “Administrative job family” under this job family the secretaries and clerks of all
departments in Zenith has been listed. The second job family is “communication” under this job
family the marketing and sales executives has been listed. The third job family is “Application
programmer” under this job family junior, intermediate and senior applications programmers
have been listed. The fourth job family is “specialist professionals” under this job family the
System Installation, System Integration; Systems Marketing specialist has been listed. The fifth
job family is “Leadership” in this job family all the directors, managers and supervisors are
listed. The last job family which our group has made is “Human resource management” under
this job family all the jobs of Human resources are listed.

The first job family is “administrative” in which secretary and clerks have been listed (figure
1.3). The work which is done by clerks and secretaries are routine work in which they follow the
orders of their seniors and accomplish a work given by them on daily basis. This kind of work
needs very little knowledge and also fewer skills, therefore this kind of job require task
behaviour from the employees. In which employees can take orders from there seniors and get
the job done in given time frame. The employee which fall under this job family should get fixed
base pay salary plus Zenith should provide their employees with meaningful affordable
healthcare benefits. This strategy mix will help the employees to job security plus benefits will
attract and retain the existing employee. Base salary of the employee is to be determined by
experience level, the market rate, and internal equity for new hires, transfers, promotions and
adjustments. Future increases in base salary should be determined by individual performance as
assessed through the performance management process.

Required Behaviour Compensation mix Task of compensation mix

Task Behaviour Base pay, pension plan Job Security
Mandatory Benefits Retain employees
Health care benefits Attract new employees
Performance Incentives (threshold) Motivation for work
Pension plan Retention
(Figure 1.3)

Zenith Medical System Incorporated’s Page 17

The second job family is “Communication” in this job family the employees from marketing and
sales are listed because they are the one who communicate with the customers and use their
communications skills to persuade the customers to buy company’s product (figure 1.4). For this
job family the membership behaviour is required, as they are first channel through which
company get introduced to the new customers. Also marketing and sales employees has to
behave like a company’s ambassador and represent the company to existing and new customers.
As discussed earlier in the report that the sales and marketing employees should get the good
base salary which should be little higher than the market base pay. Also individual targets needs
to be set plus a team incentive plan, which will motivate an individual to work hard as well as
employees will work in teams to accomplish the team incentives. This compensation mix will
bring a healthy internal competition as well as company will be benefited simultaneously.

Required Behaviour Compensation mix (Base pay, Task of compensation mix

Performance pay, Indirect pay)

Membership Lead Base pay, pension plan Job satisfaction

Behaviour Mandatory Benefits Job security
Individual Incentive plan Exerts Motivation
Team incentive plan Focus on shared Goal
Commissions
(Figure 1.4)

The third job family is “application programmer” in this job family there are junior, intermediate
and senior application programmers are listed (figure 1.5). They are the one who are skilled
workers; people with specific qualifications such as university degree in computer science can
only work as a application programmers. The main duties of an application programmer are
entering program codes into computer system, application generators such as RALLY or Oracle
forms. This job family is a core family of the company therefore organization citizenship
behaviour will be required from this job family. In this job family, the employee needs to
voluntarily undertake special behaviours beneficial to the organization. The employee creativity
to come up with new software development will definitely help company to stand out in the

Zenith Medical System Incorporated’s Page 18

market. Zenith need to use a very healthy compensation mix for this job family. Every employee
in this job family will get base salary plus flexible benefit plans that enable individual employees
to choose the benefits that are best suited to their particular needs. However, a basic or core
benefits package of life and health insurance, sick leave, and vacation ensures that employees
have a minimum level of coverage will be provided to all employees. The flexible benefits plan
will help the employees’ gain greater understanding of the benefits offered to them and the costs
incurred. Zenith can maximize the psychological value of their benefits program by paying only
for highly desired benefits. By this plan Zenith will gain competitive advantage in the recruiting
and retention of the employees. Zenith should also include the this job family into profit sharing
plan of the company which will motivate the employees to use their potential to find out
innovative ways to enhance their skill to develop software for the company.

Required Behaviour Compensation mix (Base pay, Task of compensation mix

Performance pay, Indirect pay)
Organization Lead base salary, pension plan Job satisfaction
citizenship behaviour Mandatory Benefits Security
Flexible Benefits plan Attract and retain employee
Profit Sharing plan Motivation for development
(Figure 1.5)

The fourth job family is “specialist professionals” in this job family System Installation, System
Integration, Systems marketing specialist are listed (figure 1.6). The employees from this job
family are either qualified from a very good university degree holder with some specialized field
or else an employee has several years of experience in one field of work. Zenith require Task
behaviour from these kinds of employees, these employees are generally used for training
purposes and perform tasks that have been assigned by the management. These kinds of
specialist are very important for the organization because the new employees in the organization
have to go through proper training so that they can develop their skills in the particular area of
work. And a very well experienced and highly qualify trainer is needed to train the employees
well. Therefore to attract and retain this kind of job family, Zenith needs to pay a good amount of
base salary to retain them plus bonuses. Also a non-contributory pension plan should be add into

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the compensation mix in which the contribution to a plan are made solely by the company. This
kind of compensation mix will motivate this job family to do well in their tasks. Also with non-
contributory pension plan employees will be always tempted to stick with the organization.

Required Behaviour Compensation mix (Base pay, Task of compensation mix

Performance pay, Indirect pay)
Task Behaviour Lead Base salary Job satisfaction
Mandatory benefits Security
Bonuses Motivation to perform well
Non-contributory pension plan Retention
Group and Individual performance
(Figure 1.6)

The Fifth job family is “Leadership” in this job family the Directors, managers, supervisors of all
departments except Human resource management are listed (figure 1.7). The employees from
this job family are very well seasoned in their particular field of study. Employees in this stage
have several years of experience and expertise in their relevant field. It is very important for an
organization to have stable employees at this level, therefore Zenith need to make sure they
compensate these employee in a way in which they are satisfied and eager to stay with the
organizations for longer period of time. Zenith need to acquire citizenship behaviour from these
kinds of employees and in order to obtain this behaviour Zenith need to pay a very high base
salary plus defined benefit plan in which the amount an employee is to receive upon retirement is
specially set forth. Plus gain sharing plans need to be offered to this job family to keep the
employees motivated to achieve the targets set by the organization.

Required Behaviour Compensation mix (Base pay, Task of compensation mix

Performance pay, Indirect pay)
Organization Lead Base salary Job satisfaction
citizenship Behaviour Mandatory benefits Security
Defined benefit plan Retention
Gain Sharing plan Motivate leadership
Group and Individual performance Motivate individuals in Team
Zenith Medical System Incorporated’s Page 20
(Figure 1.7)

The sixth job family is `Human resource management` in this job family the compensation
clerks, officers and managers are listed(figure 1.8). Human resource department is a very
important part of an organization. Employees of this job family need to practice competitive
strategies to recruit and select right employees for an organization. An organization needs task
behaviour from this job family. In order to acquire this behaviour from this job family zenith
need to pay moderate base pay plus bonuses. Zenith also needs to apply commission based
compensation strategy for the employees. However the commissions need to be measured on the
stability of the employees. This will motivate this job family employee to attract or recruit
employees who are looking for long term jobs in the company. Because nowadays the biggest
challenge which organizations are facing is to maintain low employee turnover. Due to high
turnover organizations product quality is hampered indirectly and therefore customer satisfaction
also decreases and it directly have a impact on sales of the company.

Required Behaviour Compensation mix (Base pay, Task of compensation mix

Performance pay, Indirect pay)
Task Behaviour Match Base salary Job satisfaction
Mandatory benefits Security
Commissions Individual motivation
Profit Sharing plan Motivate Team
Group and Individual performance
(Figure 1.8)

In order to apply effective compensation mix, zenith needs to concentrate on one of their
compensation policy. The policy which requires that compensation levels and decisions about
employee compensation be kept secret and prohibit employees from revealing their
compensation information to anyone. This policy will avoid misperceptions and distrust of
compensation fairness and pay for performance standards among employees.

Compensation Strategy Template for Each Job Family

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Job Family: Administrative

Base Pay Proportion of total

Job Evaluation 50%
Market Pricing 40%
Pay For Knowledge 10%

Performance Pay Proportion of total

Individual Performance Pay 10%
Commissions 10%
Team Performance Pay 30%

Indirect Pay Proportion of total

Mandatory Benefits 30%
Pension Plan 5%
Health And Life Insurance 5%
Employee Services 3%
Other Benefits 2%

Job Family: Communication

Base Pay Proportion of total

Job Evaluation 50%
Market Pricing 40%
Pay For Knowledge 10%

Performance Pay Proportion of total

Individual Performance Pay 10%
Commissions 10%
Team Performance Pay 30%

Indirect Pay Proportion of total

Mandatory Benefits 30%
Pension Plan 5%
Health And Life Insurance 5%
Employee Services 3%

Zenith Medical System Incorporated’s Page 22

 Other Benefits 2%

Job Family: Application programmer

Base Pay Proportion of total

Job Evaluation 50%
Market Pricing 40%
Pay For Knowledge 10%

Performance Pay Proportion of total

Individual Performance Pay 10%
Commissions 10%
Group Performance Pay 30%

Indirect Pay Proportion of total

Mandatory Benefits 30%
Pension Plan 5%
Health And Life Insurance 5%
Employee Services 3%
Other Benefits 2%

Job Family: Specialist professionals

Base Pay Proportion of total

Job Evaluation 50%
Market Pricing 40%
Pay For Knowledge 10%

Performance Pay Proportion of total

Individual Performance Pay 10%
Commissions 10%
Group Performance Pay 30%

Indirect Pay Proportion of total

Mandatory Benefits 30%
Pension Plan 5%
Health And Life Insurance 5%
Employee Services 3%

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 Other Benefits 2%

Job Family: Leadership

Base Pay Proportion of total

Job Evaluation 50%
Market Pricing 40%
Pay For Knowledge 10%

Performance Pay Proportion of total

Individual Performance Pay 10%
Commissions 10%
Group Performance Pay 30%

Indirect Pay Proportion of total

Mandatory Benefits 30%
Pension Plan 5%
Health And Life Insurance 5%
Employee Services 3%
Other Benefits 2%

Job Family: Human resource

Base Pay Proportion of total

Job Evaluation 50%
Market Pricing 40%
Pay For Knowledge 10%

Performance Pay Proportion of total

Individual Performance Pay 10%
Commissions 10%
Group Performance Pay 30%

Indirect Pay Proportion of total

Mandatory Benefits 30%
Pension Plan 5%

Zenith Medical System Incorporated’s Page 24

 Health And Life Insurance 5%
Employee Services 3%
Other Benefits 2%

EVALUATION PLAN FOR THE ZENITH

At this stage, we will introduce our proposed job evaluation plan which will be constructed using
the point method. We will look into the set of job families we already created for Zenith and
evaluate each job using the compensable factors we have selected, the factors scale we are using,
the factor weight applied and the reason for this.

For Zenith, we are selecting four evaluation factors.

These factors includes:-

 Skill.
 Effort.
 Responsibility.
 Working Conditions.

SKILL:

Basically, skills here involve education, experience, and the complexity of the decision making
aspect of the job. The skill involved in performing jobs in Zenith has to be well spelt out,
Different skills are required at different stages and department in Zenith. The skills of a system
analyst are different from the skills of a system maintenance officer. Skills needed by the

Zenith Medical System Incorporated’s Page 25

marketing department is also different from that needed by the system development, all
departments need different skills to perform their duties, the higher the skills acquired, the more
an employee earns.

EFFORT:

This is the personal ability put into the job, it involves the measure of direction received and
level of job control required performing each job, it explains if a worker works under close
supervision or is independent. It is the measure of the ability a worker puts into the job to
improve the quality of output. The effort put in by employees of the maintenance department
determines if they will be highly productive in the maintenance of customer computers, that of
the systems development determines if systems are developed at the right time to meet up with
customers need and that of the system installation determines if the systems are installed in a
perfect way that also meets up with customers specification.

RESPONSIBILITY:

This measures the ability of the workers to take responsibility for their actions. It measures the
ability of workers to be able to detect errors in the line of each development, installation or
maintenance in Zenith. Responsibilities include supervision and work relationships. It goes
ahead to explain what the error at anytime detective could have on the company. The errors here
in Zenith led to lower sales and losses; Responsibility goes a long way to explain who is doing
what and who is supposed to be responsible for what. The higher the responsibility, the higher
the job is.

WORKING CONDITIONS:

This includes the conditions of work that employees of an organization are exposed to. It may
include exposure to dirt, chemicals, extreme weather conditions and exposure to all other types
of unfavourable working environment. Here in Zenith, there is very few or no bad working

Zenith Medical System Incorporated’s Page 26

environment or unfavourable working conditions except for installation and maintenance
department who are exposed to customer's anger due to the present condition of the company.

MEASURING SCALE:

These factors apply to different families of job in Zenith department in different ways. The skill
factor applies to all employees of Zenith, the higher the skills shown on the job process, the
higher an employee is rated, Skills are needed in all department of Zenith, including the
marketing department which needs highly skilled marketers to be able to convince customers to
be able to sell the company's product.

For Responsibility, all employees are involved but employees at a higher level are more involved
in Zenith. All employees take responsibility for jobs assigned to them but some have more
responsibilities than others as long as other things like positions and experience are put into
consideration.

All staffs are also expected to put in their efforts in the process of working for Zenith, the higher
the effort put in, the more the job duties involved. Effort is a part of the job evaluation factor that
is very important in Zenith.

The working environment of Zenith is less hazardous, the working environment is safe to a high
extent in the sense that employees are not exposed to hazards or a dangerous work environment
except for the installations and maintenance workers who might face angry customers and this is
not really a serious issue.

MEASURING SCALE

Factors   System Dev System Main. System Prog. Sales  

Skill   High High High High  
Effort   High High High High  

Zenith Medical System Incorporated’s Page 27

Responsibility   High High High High  
Working Conditions   Low N/A N/A N/A  
            
 
FACTORS

Formal Education; these factors deals with the formal education acquired by an employee

Degree 1:  Completion of grade 9

Degree 2:  Completion of high school

Degree 3:  One year post secondary

Degree 4:  Two years post secondary

Degree 5:  University bachelor's degree/professional designation

Degree 6:  University Degree and professional designation

Degree 7:  Masters Degree and professional designation. 

SKILLS

Degree 1:  Knowledge of Computer application  

Degree 2:  Systems development knowledge

Degree 3:  Ability to apply systems knowledge

Degree 4:  system application knowledge and staff training

Degree 5:  System development/ maintenance

Degree 6:  System development/ maintenance/Integration

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Degree 7:  General knowledge of all systems stages. 
 

JOB EVALUATION                   
RATING
     DEGREE OF                    POINTS
RATING
JOB TITLE - SYSTEM  1 2 3 4 5 6 7 ALLOCATED
DEVELOPMENT
Education   5 10 15 20 25 30 35 140  
Experience   10 20 30 40 50 60 70 280  
Mental Skill   10 20 30 40 50 60 70 280  
Mental Effort   10 20 30 40 50 60 70 280  
Physical Effort  0 0 0 0 0 0 0 0  
Accuracy   20 30 40 50 50 70 80 340  
Responsibility   5 10 15 20 25 30 35 140  
Work Environment  0 0 0 0 0 0 0 0  
                        
Total points for this job is                1460  
1460
                    

     DEGREE OF            

RATING

                 POINTS  
JOB TITLE - SYSTEM  1 2 3 4 5 6 7 ALLOCATED

INTEGRATION
Education   5 10 15 20 25 30 40 145  
Experience   5 10 15 20 25 30 35 140  
Mental Skill   10 20 30 40 50 60 70 280  
Mental Effort   10 20 30 40 50 60 70 280  
Physical Effort  0 0 0 15 20 25 30 90  
Accuracy   20 30 40 50 50 70 80 340  
Responsibility   5 10 15 20 25 30 35 140  
Work Environment  0 0 0 0 0 0 0 0  

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Total points for this job is                 1415  

1415
                    
                
                
                  

DEGREE OF

DATING
                 POINTS  
JOB TITLE - SYSTEM  1 2 3 4 5 6 7 ALLOCATED
MAINTANANCE
Education   5 10 15 20 25 30 40 145  
Experience   5 10 15 20 25 30 35 140  
Mental Skill   10 10 30 40 50 60 70 270  
Mental Effort   10 20 30 50 50 60 70 290  
Physical Effort  0 0 0 10 20 20 30 80  
Accuracy   20 30 40 50 50 70 80 340  
Responsibility   10 10 20 20 20 30 30 140  
Work Environment  0 0 0 0 0 0 0 0  

Total point 1405     

Looking at the tables above, all departments have different job evaluations and are rated in
different ways; the different departments have different jobs and are evaluated in different ways.
All departments have their own point values for each job and it explains how jobs are rated
depending on how important it is to the company. Zenith has three major departments
represented here, the system development have the highest number of points allocated followed
by the system integration and lastly the system maintenance department. 

Zenith Medical System Incorporated’s Page 30

 CONCLUSION

The most important empirical finding of this assignment is that compensation of an organization
exerts a strong positive influence on internal and external service quality. Compensating
employees in such a manner that they internalize and identify with the organizations goals,
objectives and values will thus enhance internal and external service quality through increases
discretionary effort. Organizational compensation strategy from the discussion, one may
establish a distinction between the role of compensation strategy and the motivation reinforced
by the compensation system. It might be concluded that, in today’s competitive and rapidly
changing environment, compensation mix is must applicable in organizations in order to adapt
easily to changes. Compensation mix derives employee motivation which is a major factor in
terms of administrative tasks as well as for realization and achievement of the strategic goals.
Author has also discussed Hertzberg theory in order to understand the motivational needs of
employees.

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HERZBERG, F., MAUSNER, B., SNYDERMAN, B.B., 1959. The Motivation to Work. New
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KANE, B. AND PALMER, I., 1995., Strategic HRM or managing the employment relationship?
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Zenith Medical System Incorporated’s Page 32