The E-Sonic Compensation System: External Market Competitiveness

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The e-sonic Compensation System:
External Market Competitiveness

LIR 561: Compensation Systems
Professor: Joe Martocchio
November 15, 2005

Team 1:
Ka Man Cheung
Christine Layne
Gene Paik
Tamica Taylor
Matt Williams

Table of Contents

1.Executive Summary3

2.Pay-policy Mixes6

a.Business Development Job Structure6
b.Administrative Job Structure7
c.Software Engineering Job Structure8
d.Market Research Job Structure9
e.Customer Service Job Structure11

3.Pay-policy level decision13

4.Compensation Survey15

a.Choose competitors15
i.Industry type:15
ii.Employee number:16
iii.Union Status:16
b.Benchmark jobs16
c.Reconcile differences between benchmark jobs and e-sonic positions17 d.Update Salary data for inflation18

5.Implementation of Salary Survey Results19

a.Report and interpret results19
i.Business Development19
ii.Administrative23
iii.Software Engineering27
iv.Market Research31
v.Customer Service34
b.Integrate external and internal structures by creating pay grades and ranges39 i.Decide upon number of pay grades39
ii.Decide pay ranges40
c.Evaluate and summarize decisions made for each job structure43 i.Business Development43
ii.Market Research43
iii.Administrative44
iv.Software Engineering46
v.Customer Service46

1. Executive Summary

The focus of this section of the analysis is to decide on the allocation of pay methods in order to motivate and retain employees while also achieving external market consistency. The first step was to decide on an allocation mix consisting of base pay, short term incentives, long term incentives, and benefits for each individual job structure. Factors such as importance to strategic goals, need for retention, long term impact, and skill level factored into this decision. The result was each structure had at least 50% in base pay with incentives percentages varying based on impact to the success of the firm and benefits consistent with the market across all structures at 29%. The next decision focused on pay-policy level decisions and whether or not it was important for the structure to lead or lag the market. These decisions were based primarily on impact to overall success of e-sonic but also depended on the labor market and how completive it would be to attract certain employees. The business development, market research, and software engineering structures all led the market by a significant amount. This was due to factors such as their need for innovation, long term impact, and competitiveness in demand for this specific type of labor. Administrative and customer service lagged the market based on decisions from these factors. It is important to focus compensation resources to those structures which are most vital to success, and allow other structures less essential to fall behind the market and conserve some resources. Each structure was then analyzed based on a number of different factors. First, competitors were chosen based on industries, size, and union status. While size and status remained constant the industries varied for each. Some structures like administrative included all industries while others like the software engineering job structures included only the software, hardware, and retail industries. This decision was based on the type of similarity of jobs in each structure to that in other industries. Benchmark jobs were chosen for each position in the pay policy structures. Any discrepancies between the specific e-sonic position and the benchmark job were reconciled by either adjusting pay positively or negatively. For example, artist relationship manager was adjusted by +6 while copy writer was adjusted by -8%. These decisions were all based on how closely the benchmark job resembled the e-sonic position. Finally,...
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