Case Scenario Assignment

You are a senior consultant with Canadian HR Consultants which specializes in strategic compensation consulting. You have recently been retained by an American owned logistical software business, Corporate Logistics Inc, that has decided to open an operation in London, Ontario. The company specializes in the development and implementation of specialized logistical software for the transportation industry. This will be the company's first foray into the Canadian market and one of President John Forsi's first goals is to staff the Canadian operation quickly and efficiently, as orders are already on the books. John has been with the company 10 years, is 40 years of age and has opened a number of similar operations across the US with a high level of success. John is smart. He knows that this assignment will be a challenge. He is going to want to attract staff to the Canadian operations that tend to mirror those that have been successful in the US: well educated, ambitious risk takers that are competent technically and capable of interfacing effectively with customers. He will need a number of programmers, programmer/analysts, systems analysts, project managers etc. in addition to traditional head office senior and executive staff and top flight support staff including executive and administrative assistants. The type of staff that he will be looking for will be in short supply in the Canadian market and there will be a lot of competition for their services. In the US the average age of his work force is 30. He has heard, for example, that Canadian compensation strategy may have to be quite different than what he has faced in the US, particularly as it relates to attracting the type of employees that will best fit the culture of his firm.

John has asked you for a review in executive summary format of company sponsored defined contribution versus defined benefit pension plans and their impact on his compensation strategy for Corporate Logistics Inc going forward.

1. What are the key differences between a company sponsored defined contribution pension plan (DC plan) and a defined benefit pension plan (DB plan) from both the company and employee point of view.

2. Explain the element of risk in each of these plan types and what that means to their attractiveness.

3. Which type of plan would you recommend for John's company? Why?

4. Most union contracts do not include provisions for merit pay. Given what you have learned, explain why unions oppose merit pay Students are encouraged to refer to the text and other sources for this assignment.