Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
VII. Discussion Questions and Suggested Answers
8.1. Respond to the following statement: “Pay grades limit a company’s ability to
achieve competitive advantage.” Do you agree? Provide rationale for your
position.
Pay grades group jobs for pay policy application. Human resource (HR) professionals
typically group jobs into pay grades based on similar compensable factors and value.
8.2. Two employees perform the same job, and each received exemplary
performance ratings. Is it fair to give one employee a smaller percentage
merit because his pay falls within the 3rd quartile but give a larger
percentage merit increase to the other because his pay falls within the 1st
quartile? Please explain your answer.
8.3. Describe some ethical dilemmas sales professionals may encounter. How can
sales compensation programs be modified to minimize ethical dilemmas?
Answer to this question can be found in the MyLab
8.4. React to the statement: “Merit pay grids have the potential to undermine
employee motivation.” Please discuss your views.
Copyright ©2017 Pearson Education, Inc.
99
8.5. Compression represents a serious dysfunction of pay structures. Discuss
some of the major ramifications of compression. Also, discuss how companies
can minimize or avoid these ramifications.
VIII. End of Chapter Case; Instructor Notes, and Questions and Suggested
Student Responses
Case Name: A New Sales Representative
Instructor Notes
This new position is the first outside sales position for UFS and John must carefully
design a compensation package to motivate the Sales Representative to focus his or her
efforts on the appropriate activities. John wants to expand his business and sees two
distinct opportunities to do so. Expanding the business through adding new customers is
one approach, and John also sees an opportunity to expand the business through further
development of relationships with current customers. Both of these activities will take a
great deal of time without promise of immediate sales and the compensation structure
should recognize that requirement. However, as a small business, the company must
closely monitor their salary budget and therefore, connecting at least part of the salary to
actual sales will help ensure that the Sales Representative generates the revenue
necessary to support his or her position.
Suggested Student Responses:
8.6. What are the sales objectives for the new Sales Representative?
Copyright ©2017 Pearson Education, Inc.
100
8.7. What role will the compensation design play in motivating the new Sales
Representative?
8.8. What kind of sales incentive plan do you recommend? Why?
Because this position requires providing customer service to current customers, a
IX. Crunch the Numbers! Questions and Suggested Student Responses
Calculating Pay Range Minimums, Maximums, and Pay Range Overlap
8.9. Pay Range A: For a pay range midpoint equal to $47,500, calculate the
minimum and maximum pay values for a 15 percent range spread.
Minimum:
Copyright ©2017 Pearson Education, Inc.
101
8.10. Pay Range B: For a pay range midpoint equal to $53,750, calculate the
minimum and maximum pay rates for a 25 percent range spread.
Minimum:
8.11. What is the overlap between pay range A and pay range B
Overlap = 100% x ($50,813.96– $47,777.78)/( $50,813.96 – $44,186.05)
X. Assisted-graded Questions
8-12. How should companies address red circle rates for high performers and low
performers, respectively?
Answer to this question can be found in the MyLab
8-13. Briefly discuss designing job-based pay systems (e.g., merit pay, sales incentive pay)
and person-focused programs. What considerations arise when making a transition
from using a job-based pay system to using a person-focused plan?
8-14. MyManagementLab Only – comprehensive writing assignment for this chapter.
XI. Additional Cases from the MyManagementLab Website; Instructor Notes,
and Questions and Suggested Student Responses
Instructor Notes
Market-competitive pay systems play a significant role in attracting and retaining talented
staff. When setting a pay policy, companies have the option of lagging behind the
Suggested Student Responses:
8.15. Should Docutrend use the same pay policy for all of its open positions?
Copyright ©2017 Pearson Education, Inc.
102
Docutrend should not necessarily adopt the same pay policy for all of its open
positions. It is clear that the labor market is more competitive for the software
designers and will likely require a different approach. Carrie must carefully examine
8.16. What pay policy would you recommend? Why?
Docutrend may want to consider establishing a lead policy for paying the software
designers. Because the company’s competitive strategy is a differentiation strategy,
Docutrend needs to recruit talented software designers to ensure that that their
AACSB: Application of knowledge
Copyright ©2017 Pearson Education, Inc.
103
