Formulating the Compensation Strategy

School of Business, Centennial College

Course: Strategic Compensation (HRPD-405)

Instructor: Wenlu Feng

Group Project- Formulating the Compensation Strategy

(40% of the Course Grade)

(Winter 2013)

Purpose: 1) To apply the Compensation and Benefits knowledge in real-world situation;

2) To achieve higher level learning outcomes.

The task: Formulating a compensation strategy for an organization. Work with your project group, use the simulation cases provided in your Group Project Simulation Case posted on eCentennial, formulate compensation strategies and pay plans for the company, and submit a report for grading.

Due: Week 12 (April 1-5)

Breakdown of the task:

Part A

Question 1: Identify the major problems that are related to Alliston Instruments’ compensation system and compensation practices.

Hints: Try to find the problems from the case of Alliston Instruments. For each identified problem, ask yourself such a question: Is this problem caused by the firm’s compensation policies and practices?

Question 2: Analyze how the Alliston Instruments’ current compensation strategies and practices have caused those identified problems. Analyze all problems that are identified in Question 1. Do not skip any of them. Also, every point must be compensation-related. Discussions that are not related to compensation should not be included.

Question 3: Recommend solutions, in terms of compensation system and strategy design and implementation, to solve the identified problems. You need to explain and justify your recommendations by showing how they will help solve the identified problems. You can also further justify your recommendations with established theories and findings in the field of compensation studies.

–Hints: When you make recommendations, try to apply the concept of compensation strategy and the compensation mix. Also try to use the different methods of establishing the base pay.

Part B: Develop a pay-­for-knowledge plan for Alliston Instruments

Part C: Develop a coherent compensation strategy for Alliston Instruments

Part D: Develop and apply a job evaluation plan for Eastern Provincial University (Please note that Part D is for another organization).

Report Headings

When preparing your project report, of which the minimum length is 20 pagers (1.5 spaced). Please use the following five main headings

Section A: Identification of Current Organizational Problems, Analysis on their root causes and Recommendations for solving the problems In this section, you should identify the current problems that Alliston Instruments is facing (Try to look at the problems in operation, cost, revenue, product and service quality, productivity, cost, employee morale and behaviour, relationship between departments, and customer satisfaction, etc.), and analyze how the firm’s reward and compensation strategy and practices have caused those problems. The strategic framework in Chapter 2 and the behavioural framework in Chapter 3 are both essential in so doing. In recommendations for solving the problems, you need to Provide the proposed solutions that flow from your analysis in the previous section. Be specific in explaining what you would do. Justify your recommendations and implement your recommendation in the following sections. Your recommendations must be compensation related and should be reflected in Section B-C. For example, if you recommend a pay-for-knowledge plan for a job family, then you should create that pay plan in Section B.

Section B: Pay-for-Knowledge Plan. This section should describe and explain your pay-for-knowledge plan (or a skill-based pay plan), including the skill blocks you have chosen, in the form of a skill grid similar to that in Table 4.1 (page 137 of the text). You need to follow the five steps described on pages 136-142 of Chapter 4.

Section C: Compensation Strategy. In this section, develop your compensation strategy for each job family by following the five steps in Figure 6.1 (page 208 of the text). That is to say, you need to define the types of behaviour that Alliston Instruments and its job families need, define the role that compensation will play in generating those behaviours, determine the compensation mix, and determine the compensation level. The outcomes of all this should be summarized for each job family in a compensation strategy template as illustrated in Figure 6.2 (Page 244 of the text, also posted with the simulation cases).

To successfully complete this section, you will need to utilize the concepts contained in Chapters 4 to 6 of the text, together with the lecture notes.

*** Hint: Before you can do any of the above, you must have decided which jobs will be included under the pay for knowledge system, and which under the job evaluation system. Material in Chapter 4 will be useful in making this decision. (For jobs under the pay-for-knowledge system, you can list all of them on one strategic template. In fact, all jobs that have the same compensation mix and compensation level policy can be included on the same sheet.) This section should include the behavioural objectives you are setting for the compensation system (For example, see Table 6.5 – page 251-252).

Section D: Job Evaluation Plan. In this section you are required to develop a job evaluation plan for Easton Provincial University (Case 2). You should describe and explain your job evaluation plan, which should be constructed using the “Point Method” (see Chapter 8, especially the Lecture notes for Chapter 8). You need to describe and explain the compensable factors you have selected, the factor scales you are using, and the factor weights you are applying, along with your rationale for all this. (Watch out for the pitfalls described on pages 311-319 of Chapter 8). Completing your job evaluation plan, you should have provided a set of well-designed job evaluation scales. You also need to apply your job evaluation system to the jobs selected to be evaluated, so that there is a point total for each job. Use a table to display the results of this. The final step of Section D (Step 7) is to price the jobs described in the case. You need to apply the regression analysis to complete this task, using SPSS statistics software..

Important Notes: It is critical for you to have good understanding of the contents of Chapters 4-8, and 11 to complete Section B-D. Try to follow the course contents and lecture notes of those chapters.

Note: The above mentioned simulation cases will be posted on eCentennial

Your report should also include:

A ConclusionIn this section you should draw a conclusion on the significance of this project and the learning outcomes for you.

Reference list (not contributing to page count) —Follow the APA format for providing at least five references (including journals, the Internet, books, lecture materials, etc.).

Appendices (not contributing to page count) —Materials used in collection and presentation (e.g. internet printout, overheads, PowerPoint descriptions etc.) should be appended to your submitted report.

Work Schedules

Week 7, Submission of Section A and B (Feb. 18-22)

Week 9, Submission of Section C (March 11-15)

Week 11, Submission of Section D (March 25-29 )

Week 12, Submission of the finished report. (April 1-5 )

Note: The dates above are the due days for the interim section paper submitted via the Drop Box on eCentennial. Interim papers will not be graded, but feedback will be provided for improving your writing. Students are encouraged to submit their work earlier than the due day so that the instructor could provide feedback timely. The final report should be submitted in hard copy.


This assignment is worth 40% of the total course grade. The marks are of team-based reward. Each member of the group will be given the same marks on the condition that each member’s contribution can be identified in the final results.

Grading Criteria

Evidence of substantial effort through the project, not a hastily put together paper.

Evidence of group cooperation.

Evidence of careful writing of a well integrated paper, not just several parts put together (This will be reflected in Paper Integration in grading).

Arguments are well justified.

It is strongly recommended to discuss with and seek feedback from the instructor before you submit your report. Please feel free to contact the instructor when it is needed.

Grading breakdown (Make sure the following required elements are included in your submitted report, any missing element will result in mark deduction):

Section A 6

Section B: 7

Section C: 11

Section D. 13

Conclusion: 1

Reference: 0.5

Appendixes: 0.5

Report integration: 1 (This refers to the extent to which how well the report is integrated)

Total: 40

*** Important Notes:

The originality check is set up with the eCentennial drop-box. Any submission with more than 30% of duplication will not be accepted. The system will show that percentage when you submit your work.

Plagiarism violates the College’s policy of academic honesty and will result in zero mark.

(Distributed in Week 5, winter 2013)