Pay policy mix

Running Head: COMPENSATION 1

COMPENSATION 13

E-Sonic Compensation

Institution

Name

E-Sonic Compensation

Appropriate Pay-Policy Mix

There are several critical factors to be considered in the determination of a right pay policy mix of an organization. Firstly, it is important to consider the company’s performance in business. Secondly, how the other organizations especially, competitors treat and pay their employees is very crucial. This is because it influences the decision-making process when it comes to compensation. This is based on the fact that companies must remain competitive to attract talent. E-sonic should implement an intrinsic compensation. Such a compensation focuses on intrinsic rewards. Rewards reflect employee mindset as a result of performing their jobs. This is achieved through effective job design, fostering supportive and engaging work environments and demonstrating respect for employees. These ways managers can promote and intrinsic pay mix policy. In the case of E-Sonic, the company has used their marketing and distribution departments significantly efficient as evidenced by the exorbitant production levels that the company boasts. This means that employees should be well compensated (Mattson, 2008). This pay mix will also ensure that the highly skilled artists are effectively utilized to market the company brands. Concerning the finances and stability of the company, it is arguable that it has a positive retention rate that binds the artists for the long run. This is a good representative of maximum production for the future.

Pay-Policy Level Decisions

The company’s sales and marketing, as well as development departments, are provided with incentives as their company positions contribute to the success of the organization. However, administrative positions will maintain a higher pay rate. In fact, this is normal for the top administration positions in any organization. In this case, the least paid will be the artists. It is notable that developing artists cannot content with themselves, but still the company has been able to maintain maximum production. This implies that with time, they will be on the recipient end of a higher pay rate for their endeavors and loyalty to the organization (Brickley et al., 2017). This role of the company’s strategic initiative does not warrant extra funds to attract experienced artists. In fact, it is arguable that the company does not require professionals with higher pay demands. With a 5.00% 7.00% Base Wages 5.00% STI 2.00% LTI 5.00% 76.00% Discretionary Benefits Required Benefits Paid Leave; the job structure will maintain an 8% pay rate increase. This means that E-sonic will want to entice the best in sales and marketing departments and keep them within the organization once employed through regular pay rises to keep up with competition for talented marketing and sales personnel (Brickley et al., 2017).

Compensation Survey

1. Choose competitors based on industry, size, and union status.

It is clear that E-sonic is not among the top-ranked companies when it comes to compensation for their workers. This also means that the industry where E-Sonic operates is highly competitive. In fact, the competitors grow on a daily basis. Such competition includes companies such as Warner Bros, Cash Money Billionaire, Aftermath Shady Records and Def Jam among others. These competitors offer more comprehensive and attractive compensation to their employees. The company produces good music as part of their strategy to secure a position at the top of the competition. However, compensation practices help organizations attract talent which is integral to securing that top position. Retention and attracting skilled employees and artists represent an increase in productivity and efficiency. This analysis shows that E-sonic has a lot to learn from the competition that has impacted the change in mainstream music perceptions (Barcelona & Martocchio, 2017).

Similarly, the choice of competitors based on industry size and union aspects reveals that E-sonic which is not unionized chose competitors to compare with from non-unionized categories. This does not provide a comprehensive approach to compare the industry dynamics and compensation influences. It is critical to note that without the collective bargaining feature provided for by unions, E-sonic does not have to worry about negotiations for higher pay rates. The company’s focus should be to compete with non-unionized companies (Barcelona & Martocchio, 2017).

2. Select benchmark jobs for each structure using benchmark job descriptions.

E-sonic positions were evaluated against select trademark positions. These positions were selected based on job responsibility similarities, academic qualifications, and experience. The compensation survey was done based on these select positions.

E- Sonic Position

Selected Benchmark Position

Marketing Director

Marketing 4

Artist relationship Manager

Business Development I

Creative Director

Marketing III

Copy Writer

Marketing II

Director of Software Development

Software Development V

Software Project Manager

Software Development IV

Software Engineer

Software Development III

Software testing Specialist

Software Development I

Director of Market Analysis

Analyst III

3. Reconcile differences between benchmark jobs and E-Sonic positions

Considering that similar jobs may have different degrees of compensation, the following comparison sheet was used to account for the differences;

Skill

Adj Pay

My (employee’s) job requires substantially more skill than the benchmark job

X

+4%

My (employee’s) job requires somewhat more skill than the benchmark

+2%

My (employee’s) job and benchmark job require equal skill

0%

My (employee’s) job requires somewhat less skill than the benchmark job

-2%

My (employee’s) job requires substantially less skill than the benchmark job

-4%

Effort

My (employee’s) job requires substantially more effort than the benchmark job

X

+4%

My (employee’s) job requires somewhat more effort than the benchmark

+2%

My (employee’s) job and benchmark job require equal effort

0%

My (employee’s) job requires somewhat less effort than the benchmark job

-2%

My (employee’s) job requires substantially less effort than the benchmark job

-4%

Responsibility

My (employee’s) job requires substantially more responsibility than the benchmark job

X

+4%

My (employee’s) job requires somewhat more responsibility than the benchmark

+2%

My (employee’s) job and benchmark job require equal responsibility

0%

My (employee’s) job requires somewhat less responsibility then the benchmark job

-2%

My (employee’s) job requires substantially less responsibility then the benchmark job

-4%

4. Update salary data for inflation using CPI-U.

After a comprehensive compensation analysis ran using Microsoft Excel, as represented by the screenshot below, the data was tabulated in tables for efficiency.

The results of the CPI-U are tabulated below;

Performance Appraisal

Base Salary

Total Employees

400

Excellent

30%

Q4 $80k+

55%

Above Average

25%

Q3 $50k- $79,999

30%

Median Pay Rates

Average

10%

Q2 $30k - $49,999

15%

Q4

Q3

Q2

Q1

Below Average

5%

Q1 $0- $29,999

10%

$99,354

$71,218

$37,270

$28,833

Poor

0%

Employee Distro Grid

Excellent

Above Average

Average

Below Average

Poor

Q4

$80k+

16.5%

13.7%

5.5%

2.75%

0%

Q3

$50k+

9%

7.5%

3%

1.5%

0%

Q2

$30k+

4.5%

3.75%

1.5%

.75%

0%

Q1

0-29k

3%

2.5%

1%

.50%

0%

# of Employees

Excellent

Above Average

Average

Below Average

Poor

Q4

$80k+

66

55

22

11

0

Q3

$50k+

36

30

12

6

0

Q2

$30k+

18

15

6

3

0

Q1

0-29k

12

10

4

2

0

Desired Merit Pay Increases

Excellent

Above Average

Average

Below Average

Poor

Q4

$80k+

6%

5%

4%

0%

0%

Q3

$50k+

5%

4%

3%

0%

0%

Q2

$30k+

4%

3%

2%

0%

0%

Q1

0-29k

3%

2%

1%

0%

0%

Merit Pay Allocations

Excellent

Above Average

Average

Below Average

Poor

Q4

$80k+

$393,443

$273,224

$87,431

$0

$0

Q3

$50k+

$128,192

$85,461

$25,638

$0

$0

Q2

$30k+

$26,834

$16,771

$4472

$0

$0

Q1

0-29k

$10,379

$5,766

$1153

$0

$0

Merit Budget

Total

$558,850

$381,224

$118,696

$0

$0

$1,058,771

$5,643,330

% of payroll

18.76%

Average Merit Pay Increase

Excellent

Above Average

Average

Below Average

Poor

Q4

$80k+

$5961

$4967

$3974

$0

$0

Q3

$50k+

$3560

$2848

$2136

$0

$0

Q2

$30k+

$1490

$1118

$745

$ 0

$ 0

Implementation of Salary Survey Results

The following chart provides the results of the regression analysis of the market for sales and marketing divisions of E-sonic

Regression Results

R2

0.84

Regression equation

y = 85x + 7226.67

These results are indicative that 84% of the variation in salary explained through the regression equation. According to this line equation, the estimated compensation for the Marketing Director is $114,947 (based off of a 1200 job evaluation point). The Creative Director compensation is estimated to be $70,850 (based off of 800 job evaluation points). Lastly, the CopyWriter position salary is predicted to be $57,881 (based off of 700 job evaluation points).

The following chart summarizes the regression analysis for each job;

Position

Job Evaluation Points

Annual Salary

Administrative Assistant

775

$28k

Administrative Assistant

775

$32k

Administrative Assistant

775

$34k

Administrative Assistant

775

$26k

Administrative Assistant

775

$31k

Administrative Assistant

775

$35k

Administrative Assistant

775

$33k

Administrative Assistant

755

$31k

Executive Assistant

1250

$36k

Executive Assistant

1250

$39k

Pay Grades and Ranges

The pay grades and ranges were based off the qualifications skills and abilities for a given job structure along with compAnalysis as a guide (Sangwan, 2015). The following charts show the outcomes of eight various levels with overlaps in salaries between grades.

Grade

Minimum

Medium

Maximum

1

35,114.03

39,982.59

45,209.70

2

43,204.23

47,831.81

53,502.62

3

51,238.26

56,448.30

62,049.06

4

55,486.96

64,876.31

73,600.02

5

65,624.28

76,984.70

89,340.05

6

80,336.29

96,991.60

115,574.82

7

85,321.20

104,109.78

126,010.66

8

110,346.05

135,890.45

157,236.13

Evaluate and summarize decisions made for each job structure

In conclusion, the company should conduct a survey of salaries across markets requiring similar jobs. This is critical in determining optimal levels of compensation that are competitive and at the same level with competitors in the industry and labor market counterparts (Sangwan, 2015).This survey would make it possible to establish fair pay grades and ranges that align with internal equity. Such a mechanism would also be crucial in attracting top talent over competitors into jobs that determine the external competitiveness of E-Sonic.

References

Barcelona, D. & Martocchio, J. J. (2017). Building Strategic Compensation Systems Project: Strategic Compensation: A Human Resource Management Approach, 8th Edition.

Brickley, J., Smith, C., & Zimmerman, J. (2017). Managerial Economics and Organizational Architecture (6th ed.). New York: McGraw Hill/Irwin.

Mattson, R. (2008). Managing the challenges of global compensation. Employment Relations Today, 35(2), 51-57.

Sangwan, S. (2015). Impact of compensation management practices on employee’s performance in private sector banks.

Market Pay Graph

0

20000

40000

60000

80000

100000

120000

140000

160000

0200400600800100012001400

Job Evaluation Points

Salary

Annual Salary

Predicted Annual Salary

Market Pay Line

Pay Grades and Ranges

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

Grade/Range

1

Grade/Range

2

Grade/Range

3

Grade/Range

4

Grade/Range

5

Annual Salary

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