Compensation & Recruitment Case Study Questions

HRM 401 Compensation and Recruitment Individual Assignment Goal(s): • Develop a compensation strategy, taking into account key business, organizational and HR issues. Relevance for the Course Learning Outcomes (CLO’s): Knowledge • • Skills • • • Acquire a basic knowledge of compensation and reward management. Understand the linkage of employee performance with the compensation. Analyze and appreciate the variety of incentives schemes in an organization. Explain the different components of a company’s benefits and services. Communication skills in writing and presentations with computerized programs.

Instructions: • • Read the case application below attentively. Answer the questions. Submission: • • • • Save the document in word or pdf format. Name your file with your name and surname. Example: Sandra Ramos LMS > My assessments > Offline Assessment HRM 405 + Individual Assignment * Deadline: April 19th. Recommendations: • • • • Explain and justify your answers. USE YOUR OWN WORDS. Plagiarism is not accepted (do NOT copy and paste from your sources and amongst yourselves). Plagiarism above 30% is not accepted. Reference the sources used. Attention to direct translations from Arabic to English. Your answers may lose their meaning after translation. Weight of the group project for the final mark: • It will count for 20% of your overall mark. Text Other: • • Students who fail to submit the assignment in time will not be given another chance and they will lose their marks in full.

Any questions or queries can be directed to me at: sandra.ramos@alasala.edu.sa ————Case Application Shannon Keller has been the HR Vice President at Exactitude Manufacturing, a firm that manufactures engine parts for aircraft engines and power generation equipment in four factories in Kansas, Missouri, Texas, and New York for 3 years. Much of that time has been spent developing a new system that aligns HR strategy with Exactitude’s organizational emphasis on high‐quality manufacturing. New demands for higher productivity and product quality call for increased training and integration of more complex technology in the manufacturing process. The new system realigns wages for production employees, assemblers, inspectors, trainers, and machinists into five tiers in place of the previous system that had six pay grades.

The new tier system is based on skills, training, and responsibility. • • • • • • Tier 1 Production and Assembler 1 workers receive a base wage. These positions are entry level and require little training. Minimal skill levels are necessary. Tier 2 Inspector 1 workers receive $0.25 per hour over base pay. They inspect work done by Production 1 and Assembler 1 for accuracy and quality of work. The Inspector position requires continuous training to meet quality standards. Tier 3 Assembler 2 workers receive $0.50 over base pay. They are responsible for running essential equipment. The position requires ongoing training and continuous improvement. Tier 4 This tier includes Inspector 2, Production 2, and Trainers who receive $0.75 over base pay. These positions require skill in running precision equipment, training new employees, and/or performing inspections in high volume/critical areas that have little or no tolerance for error.

These positions require extensive training and a high skill level. Tier 5 This tier is limited to Machinists who are placed in a skilled trade category that reflects their higher skill level, additional education, and training. New machinists start at a base wage set for skilled trade with adjustments for geographic differences in pay and competition for qualified workers. Wage increases are received at 6 months, 1 year, and 2 years on the job. The new system emphasizes employee development and training to increase skills and ability. A “job bid” system was established to allow employees to bid on existing open jobs or new jobs created due to increased production throughout the facility.

Employees who have completed training and are qualified to perform the work listed in the job description are allowed to bid on a job in a higher tier up to three times a year if positions are available. Jobs are awarded to qualified employees based on training, education, and skill level. Geographical differences were only taken into account for hourly employees when determining yearly cost‐ of‐living raises. The new program was implemented 6 months ago. Employees initially greeted the idea with skepticism and concern, but with little real opposition. In the last 3 months, however, an increasing number of production workers have shown strong opposition ranging from resentment to anger with work slow‐ downs.

Shannon expected some resistance, but the increased opposition was worrisome. She gathered the HR staff from all four locations to assess the implementation of the new compensation system. She greeted the HR staff by saying, “We knew that the new compensation system would need to be adjusted as it was implemented, and we will take a close look at the concerns you’ve gathered from our employees.” Shannon went on to say, “We’ve been careful to design a compensation system that supports our strategy. The foundation of the system is good and I’m confident that we can address the implementation problems with minor adjustments and better communication.” As the meeting progressed, the HR staff presented a list of employee and management concerns: • • • • Production workers with less seniority and experience are unhappy with the new pay grades.

They feel that it takes longer to move to a higher tier position due to the increased training requirements. More senior employees feel that the system doesn’t respect their longevity, loyalty, and experience. They are frustrated that younger employees qualify for higher tier positions because of their training in newer technology. They feel that seniority should be a stronger factor in considering promotions. Starting salaries for machinists at comparable positions in different Exactitude locations vary widely due to adjustments for external factors such as the local labor market and cost of living. For example, a plant near St. Louis competes for qualified machinists with a much larger industrial manufacturer located within a few miles, driving starting hourly wages up to $24 per hour.

At a similar facility in rural Kansas, machinists start at $18 per hour. Production employees who start at the lower wages resent the differences. Employee development and training activities necessary to bid for higher tier positions will begin in 3 months. Senior production workers eager for a show of status and increased income are concerned that the delay in rolling out the training is another show of disrespect for their commitment and value to the organization.

Questions: 1. How does Exactitude utilize intrinsic and extrinsic rewards to improve employee satisfaction and performance? Explain (30 points)

2. According to the characteristics of Exactitude, the compensation plan in place and the concerns of the employees, propose two other compensation plans (considering the ones learnt in class: traditional, incentive and person-focused bases for pay) in order to improve employee satisfaction, performance and quality delivered. Explain and defend your choices. (50 points)

3. For each compensation plan proposed, justify it with an example of another organization that successfully used it. Explain and defend your answer. (20 points)

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