Final Project Guidelines
Overview - Acting as a recently hired compensation consultant, you will assist the burgeoning online music firm e-sonic to develop an internally consistent and market-competitive compensation system that recognizes the achievements of individual contributors. The major portion of the project is divided into three milestones, which will build upon the previous milestone. The milestones are submitted in Modules Three, Five, and Six. The final version of the entire project will be due at the end of Module Seven.
Outcomes - The project helps students to meet the following course outcomes:
- Students will gain an understanding of the evolution and administration of compensation and benefit programs for organizations
- Students will explore wage theory, principles and practices, unemployment security, worker income security, group insurance, disability insurance, and pension plans and how these compensation and benefit items are balanced to provide incentive and recruitment of a high-performance workforce
- The connection between the organization's mission, objectives, policies, and the implementation and revision of their respective compensation and benefit systems will be analyzed to gain a deeper understanding of the importance of such systems to the organization's overall human resource management
- At the conclusion of this course, students will be able to demonstrate the acquisition and application of theories and concepts that support the enhancement and proficiency in 7 primary competencies: strategic approach, research, teamwork, communication, analytical skills, problem solving, and legal and ethical practices
Preparation -
1. Read the Building Strategic Compensation Project narrative linked in the course menu of the MyManagementLab home page. Note: Section 3: Recognition of Individual Achievements WILL NOT be included in the course project.
2. Download the Comp Analysis Software Microsoft Excel file. Directions on accessing this file are located in the Module Resources section of Module One. To run on a PC, the file requires Microsoft Excel 2007 or later. To run on a Mac, the version requires Excel 2011 or later.
Milestones -
Milestone One: Strategic Analysis
The development of a strategic analysis guides all decisions made regarding your compensation systems throughout the project. The strategic analysis reveals firm-specific challenges, objectives, and initiatives that allow you to align the goals of a compensation system effectively with those of the company strategy.
The strategic analysis allows you to better understand the external market challenges e-sonic faces in addition to its internal capabilities. As a consultant, a thorough understanding of e-sonic's business environment allows you to better align your competitive system design with e-sonic's goals, challenges, and objectives. Follow the outline below when completing this portion of the project.
The strategic analysis is fully described in the MyManagementLab Building Strategic Compensation Systems casebook for faculty and students, linked in the course menu in MyLab. Follow the explanations and outline to complete this milestone.
Strategic Analysis Outline:
1. Executive Summary (Concisely conveys the project objectives and main findings. The executive summary is completed last, but included first in the strategic analysis.)
2. Strategic Analysis
a) Identification of e-sonic's industry based on the North American Industry Classification System (NAICS)
b) Analysis of e-sonic's external market environment
i. Industry Profile
ii. Competition
iii. Foreign Demand
iv. Long-Term Industry Prospects
v. Labor-Market Assessment
c) Analysis of Internal Capabilities
i. Functional Capabilities
ii. Human Resource Capabilities
Milestone Two: Section 1: Internally Consistent Job Structures
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:
1. Create Job Descriptions
2. Create Job Structures
3. Build Point Evaluation Method
a) Select benchmark jobs.
b) Choose compensable factors based upon benchmark jobs.
c) Define factor degree statements.
d) Determine weights for each compensable factor.
4. Calculate Point Values for e-Sonic Jobs
a) Determine point value for each compensable factor.
b) Use the job evaluation worksheet to calculate point values for each position.
c) Distribute points for each compensable factor across degree statements.
d) Rate jobs using point method.
e) Individually rate jobs to ensure reliability.
f) Resolve any discrepancies in point totals.
g) Rank jobs in each job structure according to results of your point evaluation.
Milestone Three: Section 2: External Competitiveness
Section 2 shifts your focus outside of the firm to understand its relationship with the external marketplace. You will use market survey data to compare pay rates of positions inside the firm with those in the marketplace to establish the foundations of market-competitive pay. The analysis of market data also leads you to the determination of appropriate pay-policy mixes for each of its job structures. In this section, you are asked to use CompAnalysis software developed by Howard Weiss at Temple University, which is also available in MyManagementLab.
In Section 2 of this simulation, you will shift your focus from concentrating on e-sonic's internal consistency to its external competitiveness. First, you will be introduced to the tools compensation professionals use to allocate total compensation most effectively within job structures. Many employees are unaware that their total compensation consists of much more than just base pay. Compensation professionals allocate total pay (for example, base pay, benefits, and different types of incentives) to motivate employees in different ways. You will use some of these tools to develop pay policy mixes for each e-sonic job structure. Next, you will consider pay policy level decisions for each job structure.
You will then use CompAnalysis (the included software program) to conduct an external market survey. Specific instructions provided with the software program will guide you through the steps involved in the compensation survey exercise. Finally, you will report survey findings, interpreting regression analysis results generated by the software, and provide an explanation of major decisions reached.
Section 2 Outline:
Executive Summary Findings
1. Determine Appropriate Pay-Policy Mix
2. Pay-Policy Level Decisions
3. Compensation Survey
a) Choose competitors based upon industry, size, and union status.
b) Select benchmark jobs for each structure using benchmark job descriptions.
c) Reconcile differences using the benchmark job comparison sheet.
d) Update salary data for inflation using CPI-U.
4. Implementation of Salary Survey Results
a) Report and interpret results of regression analysis for each job.
b) Integrate external and internal structures by creating pay grades and ranges.
c) Evaluate and summarize decisions made for each job structure.
Attachment:- Assignment Files.rar