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Duplox Simulation

Phase II – Aligning the Compensation System with the Market

Compensation and Benefits

Table of Contents
Phase II – Link to Simulation Phase II Google Sheet....................................................................................3
Updates to Phase 1....................................................................................................................3
Table 1 - Revised Degree Ratings for Compensable Factors in Duplox’s JE System.............3
Section F: Design of Compensation Survey..............................................................................3-6
Screen 1.................................................................................................................4
.................................................................................................................................
Section G: Identification of Benchmark Jobs..............................................................................7
Table 2 – Benchmark Jobs For Job Evaluation System........................................................7
Screen 3.................................................................................................................7
Section H: Development of the Job Evaluation Pay Structure.......................................................9
Market Line........................................................................................................................9
Screen 4.................................................................................................................9
Screen 5.................................................................................................................9
Pay Policy Line..................................................................................................................10
Screen 6...............................................................................................................10
Pay Grades and Ranges...............................................................................................10-13
Screen 7...............................................................................................................11
Pay Structure.......................................................................................................12
Screen 8..............................................................................................................13
Screen 9..............................................................................................................13
Section I: Conducting and Managing the Job Evaluation Process.........................................13-16
Who conducts the job evaluations?.................................................................................14
How should the process be communicated?....................................................................14
How should the job evaluation results be applied?..........................................................15
What appeal/review mechanisms have been (or need to be) established?.....................15
How should job evaluations be updated?........................................................................16
Section J: Pay-for-Knowledge Pay Structure........................................................................16-19
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Table 3 – Benchmark Jobs for PKS....................................................................................17

Table 4 - Lowest and Highest Levels of Total Compensation for TSSs...............................18
Table 5 - Priced Skill Blocks for Technical Services............................................................19
References.................................................................................................................................................20
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Phase II: Aligning the Compensation System with the Market

Sections F-H and J were completed with the help of this Simulation Phase II Google Sheet.

Updates to Phase I

After reviewing the market data, it was determined that some points in the job evaluation (JE)

system from Phase I needed to be revised. Additionally, the requirements for education and experience

for Duplox’s Secretary, Sales Representative, and Branch Sales Manager positions, for example, did not

align with any other similar positions from the compensation survey. It was determined that each of

these roles, along with the compensation clerk, require a grade 12 education combined with some job-

related work experience, and thus should be assigned revised point values under the JE system. After

reviewing the job descriptions more carefully, the experience points for the Sales Training Specialist were

also reduced from Phase I. The complete set of updated point values for all the jobs in the JE system is

located below in Section H - Screen 8. Point values for the compensable factor degree ratings and

definitions for the experience factor were updated as follows:

Table 1

Revised Degree Ratings for Compensable Factors in Duplox’s JE System

Degree Rating
Factor 1 2 3 4 5
Education 0 40 80 150 230
Experience (length of
0 30 50 90 150
previous job-related
(<1 year) (1-2 years) (>2-4 years) (>4-7 years) (>7 years)
experience)
Mental Effort 0 20 60 80 100
Supervision of Others 0 10 25 50 75
Exposure to Toxic
Chemicals, Toner, Ink 0 25 35 50 65

Section F: Design of Compensation Survey

The following criteria were considered in selecting market comparator firms: organizational

industry, product line, main base of operations, and the number of employees. Of these, the firm’s
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industry and product line were weighted more heavily than the latter two criteria because they are

deemed more relevant to competition for labour in the market. Duplox’s industry is considered sales

(retail), installation, and service; its product line is office machines, a type of business product. It has a

national base of operations and 1200 employees. Based on this information, the following firms were

identified as comparators to Duplox:

Screen 1

Zebra Electronics (Zebra) is comparable on two criteria; it is almost identical in size, with just 100

fewer employees, and it creates a similar product line, i.e., electronic products, which may include office

copiers. This company is therefore expected to have job positions similar to those at Duplox, such as

technical service specialists (TSSs) who service their products. This means the organization is expected to

yield suitable comparator salaries for similar jobs at Duplox.

Zorgwell Controls (Zorgwell) is similar to Zebra, except its workforce is five times larger. As with

Zebra, it is based in Ontario, which is in the same geographical location as Duplox’s head office.

Consequently, Zorgwell’s compensation rates are expected to reflect a heavy sampling of market levels in
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one out of the six regions in which Duplox operates, which will be considered in any comparisons of

compensation rates done with this firm.

Kanon Corporation (Kanon) shares many similarities with Duplox, matching the organization on

all four major criteria. It is in the same industry and sells similar products, thereby making it a direct

competitor for the customer base. Additionally, its main base of operations is national and its workforce

consists of 1300 employees - a mere eight percentage difference from Duplox.

Zorel Software Corp (Zorel) is an appropriate market comparator firm because its product line

includes computer software, which may overlap or interact with Duplox’s product line. Although the

organization is not in the same industry as Duplox, it shares a similar number of employees. Finally, its

main base of operations is in the same region as that of Duplox’s headquarters - Ontario - meaning it can

provide market data for jobs within this area.

Central Business Mach. (CBM) is a company dedicated to selling and providing services for office

machines. This company is an excellent comparator firm for matching market salaries at Duplox because

it shares strong similarities along three out of the four criteria mentioned above, including product line,

industry, and number of employees. Business operations at CBM and Duplox are both crucially driven by

selling and servicing their office machines, which makes them comparable in the way they structure their

positions, and define their growth and sustainability strategies.

EAB Electronics (EAB), headquartered in Ontario and specializing in a product line involving

electronics, provides another interesting comparison to Duplox. While EAB has more than three times as

many employees and operates in the manufacturing industry, its similarities in product line carries

significant weight in selecting which data to use for appropriate comparison salaries. Thus, EAB is

expected to provide exciting relevant data for some specialized jobs and for some ubiquitous ones, such

as those involving low-level administrative work.

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Business Supply Depot (BSD) matches Duplox on three major criteria: industry, product line, and

main base of operations; it operates in the retail industry, selling business products, and is based at the

national level. Its main differing characteristic is the size of its workforce, which is more than double that

of Duplox. This fact suggests BSD probably also uses a classical management strategy, making it a very

suitable comparator firm.

Western Office Machine (WOM) matches Duplox on two criteria–industry and product line–by

selling and servicing office machines. Although the company has only about one-third the number of

employees as Duplox, it has an identical industry and product market. This indicates that it most likely

has similar job types with similar responsibilities to those of Duplox employees, such as technically-

trained specialists who service the machines and sales representatives who sell them.

Smithers Data Services (SDS) is similar to Duplox in its number of employees and national base

of operations. These two matching criteria make the company suitable for comparison when considering

factors such as the scale or country-wide distribution of resources, salary differentials based on region,

and labour supply.

BGC Data Services (BGC) is similar to Duplox in terms of industry, size of workforce, and its main

base of operations; with 1700 employees, it operates at the national level in the business service

industry. Therefore, it is a suitable comparator company with most likely some similar job types, despite

having a different product line from Duplox.

Section G: Identification of Benchmark Jobs

Using key job matching, the following market comparator jobs, which “are well understood and

numerous in the job market” (Long & Singh, 2018) were selected to match the indicated benchmark jobs

at Duplox:

Table 2

Selected Benchmark Duplox Jobs and Their Corresponding Comparator Jobs (Table. 8.3)
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S/N Benchmark Jobs Market Comparator Jobs Job Evaluation Average Total
(Duplox) (Market) Points (Duplox) Compensation

1 Sales Representative Sales Representative, 170

$ 58,190
Commercial Products/Services

2 Director of Technical Manager, Eng. Elec. 535 $ 217,140

Services

3 Regional Sales Sales Manager 435

$ 155,595
Manager

4 Caretaker Janitor 95 $ 30,056

5 Branch Sales Manager Department Manager 285 $ 94,600

Screen 3

Based on the job description from the compensation survey, the “Sales Representative,

Commercial Products/Services'' comparator job shares similar responsibilities, experience and other

compensable factors with the Sales Representative job at Duplox. The closest comparator job with

respect to Duplox’s compensation mix, which is comprised of 50% base pay, 20% indirect pay, and 30%

performance pay, is at Zorgwell, where the sales representative receives an average of approximately

57% base pay, 13% indirect pay, and 30% performance pay. Additionally, Zorgwell’s mean total

compensation is close to the actual market average for sales representatives across all ten comparator

firms, making it suitable for aligning Duplox’s pay rate, given the company’s strategy to match the

market.

The “Sales Manager” position at CBM is comparable to the Regional Sales Manager (RSM)

position at Duplox. Indeed, of the companies that are most similar to Duplox, including Kanon, a market

leader in compensation, and WOM, a smaller company that is lagging the market, CBM’s compensation
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mix for this position most closely resembles that of Duplox. The remuneration for the RSM is composed

of a base salary of 55%, 25% performance pay, and 20% indirect pay, while CBM compensates its sales

managers with approximately 65%, 16%, and 19% in these categories, respectively.

“Manager, Engineering, Electronics” is the compensation survey’s equivalent to Duplox’s Director

of Technical Services position. These jobs both entail responsibilities for: (a) managing tasks, work

processes, procedures, and costs related to electronic products; (b) directing the preparation of budget

requests; and (c) some human resource functions, such as recruitment and selection, and conducting

performance evaluations for the employees they supervise. Additionally, both extensive experience and

strong people management skills are necessary for these managers to perform optimally. Zorgwell’s

compensation rate is closest to the market average for this position, so they provide the most suitable

comparator job for Duplox’s strategy to match the market.

The lowest level job from Duplox’s job evaluation (JE) system selected for benchmarking against

a market comparator job is that of the Caretaker, which is very similar to the “Janitor” position from the

compensation survey. Both of these roles are mainly concerned with the cleaning and physical upkeep of

the organization’s premises and workspaces. BSD, which carries a similar product line to Duplox, is

expected to have similar working conditions and job requirements for its janitors as Duplox has for its

caretakers, thus making the two jobs comparable.

While the Department Manager from Business Supply Depot does not have the same functions

as the Branch Sales Manager from Duplox, they operate similarly when considering the amount of

employees they manage and some of their purposes (both companies belong to the retail industry and

offer similar products). This can offer a good comparison to a job that falls in the middle of the corporate

ladder (not too high, but not too low either). Business Supply Depot is a company that falls in between

other companies when it comes to compensation, being close to the average for that position, allowing
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for an accurate comparison between job requirements/functions and a middle-of-the-road comparison

where the strategy of matching the market works best.

Section H: Development of the Job Evaluation Pay Structure

Market Line

Screen 4

Both simple and weighted average mean total compensations were examined in formulating the

market line, but since five specific comparator jobs were used to anchor the data, the simple average

was most appropriate for calculating the slope, intercept and correlation coefficient. The market line has

a slope of 412 and an intercept of -13406, with a correlation coefficient of 0.989. There were no major

outliers with respect to this market line.

Screen 5

Job Title Job Evaluation Points Mean Total Comp.

Janitor 95.0 $ 30,056
Manager, Dept. 275.0 $ 94,600
Manager, Eng Elec. 535.0 $ 217,140
Manager, Sales 435.0 $ 155,595
Sales Rep. 170.0 $ 58,190
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Pay Policy Line

Given Duplox’s compensation strategy for jobs included in the JE system is to match the market,

the pay policy line has the same slope and intercept as the market line.

Screen 6
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Pay Grades and Ranges

Since the maximum number of points in the JE system is 620, and the lowest-scoring job under

consideration is worth 95 points, ten pay grades were established to span the entire JE system. This

strategy consists of using an equal increase approach for the lowest two pay grades and then an equal

percentage approach for the remaining eight. Both methods began with an initial range of 30 points for

Pay Grade 1, then, after incrementing the range by six, Pay Grade 2 was established. The remaining pay

grades were calculated using increments of 12%. The range spreads were based on what is commonly

observed among Canadian businesses, maintaining between “10–20 percent for production and clerical

jobs, 20–30 percent for professional jobs, and 25–50 percent for managerial jobs” (Long & Singh, 2018).

The pay ranges were calculated based on the midpoint dollar values for each pay grade and a range

spread percentage of 20% for Pay Grades 1 and 2, and 30% for Pay Grades 3 through 10.

There are two gaps in pay ranges – approximately $7000 between Grade 1 and 2, and $3000

between Grade 2 and 3. This was deemed appropriate, reflecting the significance of education and

experience as compensable factors at Duplox. Indeed, these two contribute the highest amount of
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minimum points possible in the JE system, signaling the importance of completing grade 12-level

education and having some relevant work experience for most jobs at the organization. The remaining

pay ranges all overlap to increasing degrees, but the “top of the previous pay range is always lower than

the midpoint of the next one [and]...always [] lower than the bottom of the range two grades up” (Long

& Singh, 2018).

Screen 7

Some of the jobs from Duplox’s JE system were not considered sufficiently similar enough to any

jobs from the compensation survey. These include the Compensation Clerk (CC), Advertising and Product

Promotion Specialist (APPS), CO, training specialists, and various managers. The CC job requires several

years of work experience; in contrast, none of the clerks from the compensation survey require more

than one year of specific vocational preparation, so Duplox’s compensation for this position will be

higher than the market rates for clerk-type jobs from the survey. Similarly, training specialists in both

Marketing and Technical Services at Duplox have more years of related work experience than the training

officers from the compensation survey. As experience and education are significantly-weighted

compensable factors at Duplox, the positions will be compensated at a higher rate than the market

average for training officers.

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Performance pay accounts for a much higher percentage of total compensation awarded to

managers and executives at Duplox than at other comparator firms, meaning their overall average total

compensation may appear to be higher than the market average. The high levels of group and

organizational performance pay reflect the transition in the firm’s management strategy from classical to

human relations. The goal is to encourage managers and executives to champion interdepartmental and

intradepartmental cooperation, along with collaborative group and teamwork between various

employees, to foster positive social group norms. At Duplox, the higher total mean compensation for this

job family balances the base pay percentage being lower than the market average for various types of

managers in the survey.

Screen 8
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Screen 9

Sectio

nI

The main goals of job evaluation are to guarantee that all jobs in the organization are treated

fairly and that organizational members believe they are being equitably compensated. The JE process

produces a job hierarchy in which all jobs of equivalent compensable factor point value, regardless of

how different they might be in other minutiae, are considered part of the same pay grade and thus

compensated within the same pay range. JE has three basic goals: (a) to manage wage expenses; (b) to

create a verifiably equitable pay structure; and (c) to secure the perception of equitable pay among

individuals covered by the system. The techniques utilized to conduct job assessments and manage them
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on an ongoing basis will impact the degree to which these three goals are fulfilled. Thus the following

considerations are made for applying the JE system at Duplox:

Who conducts the job evaluations?

JE is a complex process that requires inputs from various individuals across all the departments

to which the JE system applies in order to maximize its chances of success. These representatives form a

committee that is responsible for conducting JEs. At Duplox, this committee will be chaired by the

Director of Human Resources; other key members will include the Compensation Officer (CO),

Compensation Manager (CM), and the Directors of Marketing, Technical Services, and Technical Training

and Support Services. Additional participants who will act as consultants will include managers of various

departments and their employee representatives, e.g., FSMs, inventory clerks, sales representatives, etc.

This helps to ensure that the JE system is inclusive of input from employees at all levels from all

departments, thus minimizing any potential biases.

How should the process be communicated?

When a JE is needed, managers should be informed first, as they must prepare to conduct it. The

details can then trickle down from managers to employees. There should also be official communication

from the company, in an e-mail or memo, for example, so that every person involved is uniformly

informed of how the evaluation will be conducted, what the results will reflect, and what are the

potential outcomes.

In Duplox, the JE committee will first notify the senior executives and managers, who will inform

the managers of each department. All of the department managers will, in turn, notify their staff of the

upcoming activities. These notifications should stimulate open communication amongst employees and

managers to ensure everyone understands when and how these evaluations will take place. After all

departments are informed, then a formal company-wide memo will be distributed to provide every

employee with a written confirmation of the upcoming JE process. While the memo should provide all
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key information, employees will always be encouraged to bring any questions to their superiors, which

will be facilitated by the open communication norms already established.

How should the job evaluation results be applied?

Following approval of the new compensation structure, Duplox’s Human Resource Department

will work with the manager of each department to ensure applicable updates to job descriptions,

compensation amounts, and employee information are processed. Priority will be given to positions that

are vacant. These JEs will be completed as soon as possible by the compensation team, while those for

existing jobs held by current employees may take longer to complete.

Employees who are currently paid less than the new pay ranges for their positions are known as

"green-circled employees," and they should be promoted to the minimum of the pay range for their

jobs. Employees who are currently paid more than the new pay ranges for their occupations are known

as "red-circle employees" (Long & Singh, 2018). It is best to treat red-circled persons as though they are

at the top of their pay range, ineligible for merit raises or scale increases but still eligible for merit

bonuses. It will be beneficial to accelerate the retirement of red-circled employees by providing early

retirement incentives, allowing Duplox to hire a new employee at the bottom of the wage scale.

What appeal/review mechanisms have been (or need to be) established?

In order to promote morale and motivation, the compensation system must be perceived as fair

and equitable, i.e., it must be procedurally just (Long & Singh, 2018). If any workers believe they are

being rewarded unfairly, they need some formal course of action through which they can appeal

decisions made during the JE process. The employees will first bring their concerns to the CO, along with

any new information that might be relevant to the appeal. The CO will review their concerns and

relevant information, consulting with the CM if needed. These two are expected to represent the JE

committee and might be able to satisfy the workers’ concerns through better communication and/or
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explanations for the reward decisions. However, if they cannot resolve the issue for the complainants,

then the matter will be escalated to the Director of Human Resources, who will issue the final decision.

Ideally, if the JE process was done correctly, this should be a very rare occurrence; additionally,

the JE committee should be able to provide sound rationale for their decisions. However, if the

committee notices an unusually large number of complaints, then it is possible that the JE system is

faulty in some respect, in which case there may be a need to re-evaluate at least some jobs. Authority to

formally review and adjust the JE system will rest with the JE committee.

How should job evaluations be updated?

Once the new compensation program is established, it is critical for Duplox to define a

procedure and assign responsibility to one specific individual for identifying any of the following alerts

that would trigger a review and update of the JE system: (a) any significant change in current jobs; (b)

the generation of new jobs; (c) a change in the company's strategy where behaviours different from

those taken into account in the design of the current compensation program are valued; (d)

dissatisfaction or inequity on the employees and legislative changes that apply to compensation or salary

affect the organization's compensation package.

The CO will be responsible for updating the JE system; consequently, this individual should be

trained to maintain it and to document any procedural changes that are made, preferably through

version management. The CM will need to sign off on minor changes in the JE system; when an update is

significant, it must be endorsed by the established JE committee.

Section J

Comparator jobs for the pay-for-knowledge system (PKS) were selected by matching the

knowledge, skills, experience, and abilities (KSEAs) indicated in the skill grid from Section C of Phase I to

those required for the jobs included in the compensation survey; specifically, the “entry-level” and “top-

level” skill sets were matched to comparator jobs at the bottom and top of the skill grid, respectively.
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This was used to establish total compensation levels for TSSs at Duplox using the high-low method, as

follows:

Table 3

Selected Benchmark Duplox PKS Jobs and Their Corresponding Comparator Jobs

S/N Benchmark Jobs (Duplox) Market Comparator Jobs (Market)

1 Technical Service Specialist I Technician, Apprentice, Electrical Machinery

2 Technical Service Specialist III Supervisor, Technical Services, Electrical Machinery

The “Technician, Apprentice, Electrical Machinery (Entry-level)” job bears significant

resemblance to the TSS I position with respect to job duties and necessary abilities. Both jobs require the

KSEAs to construct and install machines according to routine specifications, manage or change machine

settings, test individual components, and perform regular service. The apprentice technician handles

simple job duties and works under close supervision, just as the TSS I does at Duplox.

The “Supervisor, Technical Services, Electrical Machinery (Top-level)” job requires the KSEAs

reflected in the top level of Duplox’s PKS, i.e., those of the most seasoned TSS III. Both of these positions

rely on an in-depth understanding of machine settings and components, the various ways in which they

can malfunction, and how to repair, adjust, or replace any electrical and mechanical parts. Additionally,

this job entails supervision and training of other technicians with less-developed KSEAs to service the full

range of machines under their purview.

Screen 4
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As discussed in Phase I, Duplox’s strategy for TSS compensation is to continue to lead the

market. The following calculations show the total mean compensations for the TSS Is and IIIs. The results

will reflect the minimum and maximum compensation rates for TSSs:

Table 4
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Lowest and Highest Levels of Total Compensation for TSSs

Compensation Rates Entry-level job Top-level job

Mean Total Comp.: $30,684 $58,680

Leading the market by 5% + $ 1,534

Leading the market by 12% + $ 7,042

Total mean pay for TSS top level: $32,218 $65,722

Recalling from Phase I, the compensation mix breakdown for TSSs is as follows:

Compensation Component Percentage Entry-level TSS I Top-level TSS III

1. Base Pay 70 $22,552.60 $46,005.40
1. Pay for knowledge 70 $22,552.60 $46,005.40
2. Performance Pay 10 $3,221.80 $6,572.20
a. Individual performance pay 5 $1,610.90 $3,286.10
i. Merit bonuses 5 $1,610.90 $3,286.10
b. Group performance pay 5 $1,610.90 $3,286.10
i. Gain sharing 2.5 $805.45 $1,643.05
ii. Goal sharing 2.5 $805.45 $1,643.05
3. Indirect Pay 20 $6,443.60 $13,144.40
1. Mandatory benefits 8 $2,577.44 $5,257.76
2. Pension plan 3 $966.54 $1,971.66
3. Health & life insurance 7 $2,255.26 $4,600.54
4. Paid time off 2 $644.36 $1,314.44

“Typically, as the individual progresses through the system, pay levels should lead the market more as

the value of the employee increases” (Long & Singh, 2018). The compensation for TSSs leads the market

by five percent starting at the entry level, and increases to 12% by the top. The skill blocks were priced

based on SME feedback about the relative levels of effort required to master each one. The salary gap of

$33,504 (the salary difference between the TSS entry-level and the top-level job) will be distributed

throughout the 13 skill blocks on the skill grid for technical services, as shown on the following page.

Table 5

Priced Skill Blocks for Technical Services

Level Installation Servicing and Repair Product Overhauls Experience S

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Level III Performs every type of Handles adjustment of Performs complex At least three years of Sup
product installation complex quality overhauls experience servicing II in
problems products Wit
Independently handles sale
repair of major product iden
breakdowns and tech
malfunctions of e
suit

$2,848 (8.50%) $3,015 (9%) $3,350 (10%) $3,685 (11%)

Level II Performs routine and Performs routine Assists TSS III in major At least one year of Sup
complex product product servicing and product overhauls experience servicing I in
installations adjustment of quality products Perf
problems the-
Does repair of product as r
breakdowns and
malfunctions
Assists TSS III in major
malfunctions
$2,010 (6%) $2,178 (6.50%) $2,345 (7%) $2,513 (7.50%)
Level I Performs routine Performs routine Assists TSS IIs and IIIs in
product installations product servicing major product overhauls
Assists TSS II or III in Assists TSS IIs and IIIs in
complex product product breakdowns
installations
$1,508 (4.50%) $1,591 (4.75%) $1,759 (5.25%)
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References

Long, R. J., & Singh, P. (2018). Strategic Compensation in Canada. (7th ed.). TopHat Monocle Corp.