E-sonic Compensation
Instructions:
Section 1 introduces you to the specification of internally consistent job structures. Through writing job descriptions, the development of job structures, and both the development and implementation of a point evaluation method to quantify job differences objectively, you build the framework for internal equity.
In Section 1, you will focus on building an internally consistent compensation system. An internally consistent compensation system design will clearly define the relative value of each e-sonic sample job, creating a job hierarchy and an objective rationale for pay differences.
As an e-sonic consultant, you are offered a sample of e-sonic jobs in Section 1. Currently, e-sonic employs 100 people and will be hiring many more. However, for the purpose of this simulation, you are asked to work with the sample of four jobs offered (see Appendix 2 for sample jobs, located in the MyManagementLab project tab). Limiting the number of jobs removes one level of complexity from the simulation and allows you to focus on learning the functions of compensation system design. The framework you develop classifying sample jobs can easily be adapted in the future to include all e-sonic positions.
Section 1 Outline:
- Create Job Descriptions
- Create Job Structures
- Build Point Evaluation Method
- Select benchmark jobs.
- Choose compensable factors based upon benchmark jobs.
- Define factor degree statements.
- Determine weights for each compensable factor.
- Calculate Point Values for e-Sonic
Jobs
- Determine point value for each compensable factor.
- Use the job evaluation worksheet to calculate point values for each position.
- Distribute points for each compensable factor across degree statements.
- Rate jobs using point method.
- Individually rate jobs to ensure reliability.
- Resolve any discrepancies in point totals.
- Rank jobs in each job structure according to results of your point evaluation.
The Internally Consistent Job Structures section is fully described in the MyManagementLab Building Strategic Compensation Systems casebook for faculty and students, linked in the MyLab course menu. Follow the explanations and outline to complete this milestone. Section 1: Internally Consistent Job Structures is due at the end of Module Five.
Solution.
E-sonic Compensation
The benchmark jobs selected are; Marketing Director, Creative Director, Copy Writer Director of Market Research, and a Market Research Assistants (Martocchio, 2016).
Using COLA calculation, I obtained 1.8.
Since E-sonic is located in Los Angeles, it targets at recruiting the most experienced and savvy software development staffs to live and work there. Calculation of COLA was based on the Consumer Price Index for Riverside and Orange County, which were sensible. A 1,8 5 COLA indicates that from January 2015-2016, the average cost of goods and services will improve. As a consultant, I suggest that E-sonic must consider this parameter when coming up with a compensation plan for employees. After analysis of the competitor’s pay on similar marketing positions, the average will have to be increased a percentage of 1.8.
Pay Grades
Three pay grades are established. First, when looking at the various jobs within this family, outcome suggests that these jobs do not have a large difference in their evaluation points allocated to them. Therefore, to come up with a structure that differentiates these jobs, the basis should be with similar skills and requirements of various jobs and there should be no social distance between the workers to that are hired. Also, because there is the presence of less hierarchy among the employees, there is need to make their salary level closer. Such a plan will help them work as a team; consequentially overall performance will be observed at E-Sonic. The first grade will range between 0-375 evaluation points. The second will be will lie between 376-800, and the third will be from 801-1,250.
Range Spreads
According to this structure, the first pay grade does not contain any jobs. Pay grade 0-375, will consist of interns and employees who are likely to be promoted to higher levels as the gain skills and knowledge necessary for their performance. The range spread for this category will be 20%, a smaller range spread. The Market Research Analyst and the Copy Writer will be categorized at pay grade 376-800 as there require more responsibility and skills. Their range spread will be larger, 35% range spread. Finally, the other three jobs, the Director of Marketing Research, Marketing Director, and Creative Director, will fall under pay grade 801 to 1,250 evaluation points, and their range spread will be 45%. The reason behind categorizing them her is that these jobs have required higher levels of professionality. The employees at this sector work hand in hand with the company executives and are engaged in marketing decisions at E-sonic. The reason behind limiting the range spread to 50% for this category is that it is meant for a C-suite job. All highest ranking jobs fall just below 505.
When data is retrieved. One must ensure that E-sonic is externally equitable. The most relevant industries that data will be collected is the retail and software industries. They should compare themselves with the compensation plans stipulated by the two industries. Therefore, unionization is unnecessary for e-sonic, as it is an online music store, and most works involve software development and technology. As a medium sized company, E -Sonic must look for larger software companies like Microsoft and IBM. For this reason, E-sonic will require fewer employees (Martocchio, 2016)
References
Hasan, S., Ferguson, J. P., & Koning, R. (2013). The Lives and Deaths of Jobs. A Mid-Range Theory of Job Structures.
Martocchio, J. J. (2016). Strategic Compensation: A Human Resource Management Approach, Student Value Edition. New York: Prentice Hall.
Mathis, R. L., Jackson, J. H., Valentine, S. R., & Meglich, P. (2016). Human Resource Management. New York: Nelson Education.