FASTCAT PHASE II
MNGT 433-Compensation & Benefits
4/22/2014
Logical Thinkers Consulting Company
Damian Malagari
Kerry Ahearn
Melissa Hekl
NgoanPhan
Chau Tran
Table of Contents
EXECUTIVE SUMMARY ......................................................................................................................... 3
RECOMMENDED STRATEGY FOR EXTERNAL COMPETITIVENESS.................................... 4
Best Alternatives for FastCat ......................................................................................................... 4
Pay Level and Mix of Forms ........................................................................................................... 4
Integrating the External and Internal Structure .................................................................... 5
Preliminary Ideas ............................................................................................................................... 5
SURVEY DESIGN OF TOTAL COMPENSATION OF FASTCAT’S COMPETITORS .............. 6
Selecting Benchmarks and Matching With FastCat Jobs ..................................................... 6
Selecting Competitors in FastCat’s External Market ............................................................ 6
Analyzing the Data: Deciding What Forms to Compare ...................................................... 8
Analyzing the Data: Adjusting for Aging ................................................................................ 11
Evaluating the Regression Line and the Fit Between FastCat and the Market ....... 15
FASTCAT’S PAY POLICY LINE ......................................................................................................... 19
INTEGRATING INTERNAL AND EXTERNAL STRUCTURES ................................................. 20
Bands and Zones.............................................................................................................................. 20
Overlapping ....................................................................................................................................... 21
EVALUATING THE RESULTS ........................................................................................................... 21
Description of Analysis ................................................................................................................. 23
FastCats’ Strategy and Rationale to Lag Pay Levels ........................................................... 24
2
EXECUTIVE SUMMARY
Our Proposal for FastCat’s compensation system in Phase II focuses on the base pay as
well as providing incentives. In order to maintain its competitiveness in the industry,
FastCat should lag the market. They must ensure their pay structure is strategically
differentiated within the marketplace. The appropriate pay structure and compensation
plan will help FastCat strengthen employee retention and increase productivity through
incentives, rewarding performance, and employee engagement. FastCat’s success will be
determined by its ability to balance the pay structure with firm profitability. We
recommend FastCat use bands and zones because of the goal established in Phase I to be
a more egalitarian organization.
3
RECOMMENDED STRATEGY FOR EXTERNAL COMPETITIVENESS
Best Alternatives for FastCat
When determining a new compensation strategy for FastCat, we decided the best option
would be a job-based structure because it aligns most appropriately with FastCats’ new
mission towards “A Partnership for Success.” Phase II is all about focusing on our
internal pay structure and measuring the similarities in comparison to our external
competitors. As discussed earlier, the easiest way to figure out a pay structure is to
compare our pay structure to outside companies. We will compare our base pay to what
other companies in the industry pay for similar job positions.
Pay Level and Mix of Forms
FastCat needs to cut some of its costs. We recommend that the company lag the market in
order to save money. Since FastCat is unable to meet the market in base salaries, the
organization should consider offering bonuses or non-monetary benefits for employees.
These will work as incentives for employees to work harder as well as help with
employee retention.
The compensation plan will be a mix of base salary, bonuses, and benefits. FastCat is a
highly innovative company and should pay for performance. Bonuses should be offered
for exemplary performance where employees show an opportunistic mindset,
imagination, and initiative to create value from the given resources. This will keep
employees motivated and improve FastCat processes.
4
Integrating the External and Internal Structure
Integrating FastCats’ pay structure with its external competitors would be best done by
implementing Bands and Zones instead of the alternative of Grades and Ranges. We
chose this method since the focus is on a more egalitarian structure. FastCat will be able
to control compensation while allowing for opportunities to reward employees for
individual performance. Banding attempts to collapse hierarchy into fewer salary ranges
with wider range spreads.
Preliminary Ideas
The main objective when looking at external competitiveness is to control cost, increase
revenue, and attract and retain employees. FastCat’s ratio of revenue to labor costs has
been decreasing for the past two years and our job is to turn that around. We recommend
to lag the market so that FastCat incurs less labor costs each year. In addition, we will
add incentives, non-monetary benefits, bonuses, and stock options in order to increase
productivity and motivate employees to be as innovative and creative as they can.
FastCat’s mission statement focuses on innovation and teamwork and we believe the
incentives we suggest will offer enough to retain and motivate FastCat’s valued
employees.
5
SURVEY DESIGN OF TOTAL COMPENSATION OF FASTCAT’S COMPETITORS
Selecting Benchmarks and Matching With FastCat Jobs
When selecting the benchmark jobs we decided to compare jobs that are most similar to
FastCat’s. We used three from each job category (support, managerial, technical, and
marketing), which were the highest, middle, and lowest positions. After choosing these,
we read each job description included in the survey. From this, we matched each of the
12 FastCat jobs by focusing on the tasks included in the descriptions, the skills they
should possess to complete these tasks, and the education and experience typically
required. Table 1 shows the FastCat jobs with their point values and the benchmark jobs
we felt were most similar.
Table 1: FastCat Benchmarks
FastCat Job
Point Value
Survey Job
400
Engineering Manager 3
Senior Fellow
370
Engineer 4
Software User Interface Architect
355
Engineer 3
Software Developer
340
Marketing Manager 1
Graphics Designer
340
Office Support 6
Administrative Leader
295
Marketer 4
Software Solutions Consultant
265
Technician 4
Quality Assurance Analyst
260
Office Support 5
Green Guru
215
Office Support 3
Project Support Assistant
200
Marketer 1
Marketing Support
180
Technician 2
Technician
145
Office Support 2
Administrative Aid
Selecting Competitors in FastCat’s External Market
FastCat is a software company specialized in providing healthcare support to small and
medium sized medical facilities. Its objective is to “provide the right information to the
6
right people at the right time to ensure the right care”. Healthcare Support is an industry
with medium to high entry barriers and rivalry and has around 150 employees, which is
considered a small firm. FastCat’s goal is to become a well known software company.
For these reasons, we checked the 60 companies included in the survey to conduct the
comparison. We chose the companies that were most similar to FastCat, which included
both software and computer hardware companies that develop medical software, as well
as web-based IT solutions and B2B software that support the healthcare field. Table 2
shows the 14 companies we chose to compare to FastCat along with their current
compensation features.
Table 2: External Competitors
Company
#
4
10
14
23
25
33
43
46
47
48
53
54
55
60
Industry
Size
Software
Software
Software
Software
Software
Software
Cptr/hdw
Software
Software
Cptr/hdw
Software
Software
Software
Software
Medium
Medium
Medium
Small
Medium
Medium
Medium
Small
Medium
Small
Small
Small
Small
Medium
Base/Total
Comp
87%
87%
80%
80%
83%
72%
83%
83%
79%
80%
62%
78%
60%
85%
Benefits/Base Stock/Base Bonus/Base
14%
14%
20%
80%
83%
8%
13%
12%
14%
15%
10%
13%
12%
10%
0%
1%
0%
13%
6%
20
3%
7%
5%
4%
47%
15%
48%
3%
0%
0%
5%
2%
3%
12%
3%
4%
8%
5%
4%
0%
7%
4%
7
Analyzing the Data: Deciding What Forms to Compare
When matching the external competitors data to FastCats’ compensation, we were able to
determine which job positions to use as benchmarks by analyzing the mean salary for
each position. This data includes base salary, total cash, total compensation, bonuses, and
stock options. Our data is presented in Tables 3-6 and represents salary information for
small and medium software and computer hardware companies. We used the mean base
salary as our compensation metric because we wanted each salary to be evenly weighted
instead of weighting the salaries by the size of the company.
Table 3: Software - Medium
Benchmark
Job
Engineering
Manager 3
Engineer 4
Engineer 3
Marketing
Manager 1
Office
Support 6
Marketer 4
Technician 4
Office
Support 5
Office
Support 3
Marketer 1
Technician 2
Office
Support 2
FastCat Job
Base Salary
Total Cash
$175,220.79
Total
Comp
$229,232.34
Senior Fellow
$153,522.09
Software User
Interface
Architect
Software
Developer
Graphics
Designer
Administrative
Leader
Software
Solutions
Consultant
Quality
Assurance
Analyst
Green Guru
Project Support
Assistant
Marketing
Support
Technician
Administrative
Aid
Bonus
$24,365.16
Stock
Options
$46,236.00
$96,012.88
$99,807.45
$115,218.05
$8,673.36
$15,531.61
$82,791.43
$85,551.47
$98,279.20
$6,424.55
$7,885.31
$99,952.94
$104,980.62
$120,156.35
$6,523.70
$6,750.94
$51,589.21
$53,366.31
$61,498.68
$2,733.76
$$557.89
$96,992.41
$103,435.67
$115,111.44
$9,661.38
$3,815.00
$43,837.33
$46,167.72
$54,983.35
$3,435.48
$2,448.72
$48,769.18
$49,648.94
$58,300.74
$2,396.60
$485.00
$38,367.95
$39,103.62
$46,103.23
$1,002.18
$511.11
$53,755.43
$58,034.93
$65,803.57
$8,559.00
$4,100.00
$29,805.35
$31,442.47
$30,859.57
$31,972.52
$37,496.81
$38,994.04
$1,464.40
$766.52
$2,122.22
$1,005.88
8
Table 4: Software - Small
Benchmark
Job
Engineering
Manager 3
Engineer 4
Engineer 3
Marketing
Manager 1
Office
Support 6
Marketer 4
Technician 4
Office
Support 5
Office
Support 3
Marketer 1
Technician 2
Office
Support 2
FastCat Job
Base
Salary
$170,286.63
Software User
Interface
Architect
Software
Developer
Graphics
Designer
Administrative
Leader
Software
Solutions
Consultant
Quality
Assurance
Analyst
Green Guru
Project Support
Assistant
Marketing
Support
Technician
Administrative
Aid
Senior Fellow
Total Cash
$191,412.63
Total
Comp
$366,385.77
Bonus
$42,252.00
Stock
Options
$324,600.00
$106,939.95
$114,385.07
$146,662.66
$15,795.38
$45,935.71
$87,139.29
$90,512.15
$110,863.70
$8,086.50
$25,057.14
$124,124.20
$133,854.87
$225,786.82
$9,730.67
$117,550.00
$54,582.08
$55,242.08
$87,165.51
$1,320.00
$21,750.00
$120,734.86
$121,499.98
$145,832.83
$2,524.90
$15,378.57
$41,591.85
$43,380.19
$56,715.36
$2,682.50
$16,300.00
$52,240.37
$52,240.37
$61,389.68
None
$550.00
$45,674.85
$46,263.85
$53,558.97
$589.00
None
N/A
N/A
N/A
N/A
N/A
$36,137.50
$39,117.00
$36,509.25
$39,557.88
$42,793.34
$46,959.11
$743.50
$543.25
None
3,600.00
9
Table 5: Computer Hardware - Medium
Benchmark
Job
Engineering
Manager 3
Engineer 4
Engineer 3
Marketing
Manager 1
Office
Support 6
Marketer 4
Technician 4
Office
Support 5
Office
Support 3
Marketer 1
Technician 2
Office
Support 2
FastCat Job
Base
Salary
N/A
Software User
Interface
Architect
Software
Developer
Graphics
Designer
Administrative
Leader
Software
Solutions
Consultant
Quality
Assurance
Analyst
Green Guru
Project Support
Assistant
Marketing
Support
Technician
Administrative
Aid
Senior Fellow
Total Cash
N/A
Total
Comp
N/A
Bonus
N/A
Stock
Options
N/A
$102,802.97
$106,771.45
$118,437.86
$3,968.48
None
N/A
N/A
N/A
N/A
N/A
$115,909.87
$127,399.47
$150,385.05
$14,362.00
$55,300.00
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$46,421.20
$48,575.77
$58,492.36
$2,154.57
$4,900.00
$62,445.60
$66,617.10
$82,823.29
$4,171.50
$4,000.00
N/A
N/A
N/A
N/A
N/A
$70,898.87
$75,020.72
$83,882.18
$4,121.86
None
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
10
Table 6: Computer Hardware - Small
Benchmark
Job
Engineering
Manager 3
Engineer 4
Engineer 3
Marketing
Manager 1
Office
Support 6
Marketer 4
Technician 4
Office
Support 5
Office
Support 3
Marketer 1
Technician 2
Office
Support 2
FastCat Job
Base
Salary
N/A
Total
Cash
N/A
Total
Comp
N/A
Bonus
N/A
Stock
Options
N/A
Software User
Interface Architect
Software
Developer
Graphics Designer
$81,958.13
$88,935.04
$105,108.20
$6,976.92
$9,433.33
$69,409.59
$74,428.47
$90,635.77
$5,018.88
$6,742.86
N/A
N/A
N/A
N/A
N/A
Administrative
Leader
Software Solutions
Consultant
Quality Assurance
Analyst
Green Guru
$50,231.13
$50,865.38
$58,062.88
$634.25
$500.00
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Project Support
Assistant
Marketing Support
Technician
Administrative
Aid
$39,059.48
$39,558.98
$45,956.06
$499.50
None
N/A
N/A
$32,628.18
N/A
N/A
$33,048.78
N/A
N/A
$38,879.30
N/A
N/A
$420.60
N/A
N/A
None
Senior Fellow
Analyzing the Data: Adjusting for Aging
Tables 3-6 above show salary data for the past six months. In order to create a new pay
structure system for FastCat to use in the future, we aged our data to determine what
salary figures would look like down the road in comparison to our external competitors.
We decided to age our data 5% because according to the compensation textbook, on
average, the data should be increased by 5% every year to accurately show aging
statistics. Tables 7-10 display our aged data for software and computer/hardware small
and medium companies. After analyzing our results with a percentage increase, the base
salaries range anywhere from a $2,500 to over $6,000 increase.
11
Table 7: Software - Medium Aged
Benchmark
Job
Engineering
Manager 3
Engineer 4
Engineer 3
Marketing
Manager 1
Office
Support 6
Marketer 4
Technician 4
Office
Support 5
Office
Support 3
Marketer 1
Technician 2
Office
Support 2
FastCat Job
Base
Salary
$161,198.19
Total Cash
Software User
Interface
Architect
Software
Developer
Graphics
Designer
Administrative
Leader
Software
Solutions
Consultant
Quality
Assurance
Analyst
Green Guru
Project Support
Assistant
Marketing
Support
Technician
Administrative
Aid
Senior Fellow
Bonus
$182,896.89
Total
Comp
$236,908.44
$24,365.16
Stock
Options
$46,236.00
$100,813.53
$104,608.09
$120,018.69
$8,673.36
$15,531.61
$86,931.00
$69,691.04
$102,418.77
$6,424.55
$7,885.31
$104,950.59
$109,978.27
$125,154.00
$6,523.70
$6,750.94
$54,168.67
$55,945.77
$64,078.14
$2,733.76
$557.89
$101,842.03
$108,285.29
$119,961.06
$9,661.38
$3,815.00
$46,029.19
$48,359.58
$57,175.22
$3,435.48
$2,448.72
$51,207.64
$52,087.40
$60,739.20
$2,396.60
$485.00
$40,286.35
$41,022.02
$48,021.62
$1,002.18
$511.11
$56,443.21
$60,722.71
$68,491.35
$8,559.00
$4,100.00
$31,295.62
$33,014.60
$32,349.84
$33,544.64
$38,987.07
$40,566.16
$1,464.40
$766.52
$2,122.22
$1,005.88
12
Table 8: Software - Small Aged
Benchmark
Job
Engineering
Manager 3
Engineer 4
Engineer 3
Marketing
Manager 1
Office
Support 6
Marketer 4
Technician 4
Office
Support 5
Office
Support 3
Marketer 1
Technician 2
Office
Support 2
FastCat Job
Base
Salary
178,800.96
Total Cash
Software User
Interface
Architect
Software
Developer
Graphics
Designer
Administrative
Leader
Software
Solutions
Consultant
Quality
Assurance
Analyst
Green Guru
Project Support
Assistant
Marketing
Support
Technician
Administrative
Aid
Senior Fellow
Bonus
199,926.96
Total
Comp
374,900.10
42,252.00
Stock
Options
324,600.00
112,286.95
119,732.07
152,009.65
15,795.38
45,935.71
91,496.25
94,869.11
115,220.67
8,086.50
25,057.14
$130,330.41
$140,061.08
$231,993.03
$9,730.67
$117,550.00
$57,311.18
$57,971.18
$89,894.61
$1,320.00
$21,750.00
$126,771.60
$127,536.72
$151,869.58
$2,524.90
$15,378.57
$43,671.45
$45,459.78
$58,794.95
$2,682.50
$16,300.00
$54,852.39
$54,852.39
$64,001.69
None
$550.00
$47,958.59
$48,547.59
$55,842.71
$589.00
None
N/A
N/A
N/A
N/A
N/A
$37,944.38
$41,072.85
$38,316.13
$41,513.73
$44,600.22
$48,914.96
$743.50
$543.25
None
$3,600.00
13
Table 9: Computer Hardware - Medium Aged
Benchmark
Job
Engineering
Manager 3
Engineer 4
Engineer 3
Marketing
Manager 1
Office
Support 6
Marketer 4
Technician 4
Office
Support 5
Office
Support 3
Marketer 1
Technician 2
Office
Support 2
FastCat Job
Base
Salary
N/A
Total Cash
Software User
Interface
Architect
Software
Developer
Graphics
Designer
Administrative
Leader
Software
Solutions
Consultant
Quality
Assurance
Analyst
Green Guru
Project Support
Assistant
Marketing
Support
Technician
Administrative
Aid
Senior Fellow
Bonus
N/A
Total
Comp
N/A
N/A
Stock
Options
N/A
$107,943.12
$111,911.60
$123,578.00
$3,968.48
N/A
N/A
N/A
N/A
N/A
N/A
$121,705.36
$133,194.96
$156,180.54
$14,362.00
$55,300.00
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$48,742.26
$50,896.83
$60,813.42
$2,154.57
$4,900.00
$65,567.88
$69,793.38
$85,945.57
$4,171.50
$4,000
N/A
N/A
N/A
N/A
N/A
$74,433.81
$78,565.67
$87,427.12
$4,121.86
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
14
Table 10: Computer Hardware - Small Aged
Benchmark
Job
Engineering
Manager 3
Engineer 4
Engineer 3
Marketing
Manager 1
Office
Support 6
Marketer 4
Technician 4
Office
Support 5
Office
Support 3
Marketer 1
Technician 2
Office
Support 2
FastCat Job
Base
Salary
N/A
Total
Cash
N/A
Total
Comp
N/A
Bonus
N/A
Stock
Options
N/A
Software User
Interface
Architect
Software
Developer
Graphics Designer
$86,056.03
$93,032.95
$109,206.10
$6,976.92
$9,433.33
$72,880.07
$77,898.95
$94,106.25
$5,018.88
$6,742.86
N/A
N/A
N/A
N/A
N/A
Administrative
Leader
Software
Solutions
Consultant
Quality Assurance
Analyst
Green Guru
$52,742.68
$53,376.93
$60,574.43
$634.25
$500.00
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Project Support
Assistant
Marketing
Support
Technician
Administrative
Aid
$41,012.45
$41,511.95
$47,909.03
$499.50
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$34,259.59
N/A
$34,680.19
N/A
$40,510.71
N/A
$420.60
N/A
$34,259.59
Senior Fellow
Evaluating the Regression Line and the Fit Between FastCat and the Market
Once we completed Tables 7-10, we found regression lines for each. For medium
software companies (shown below in Figure 1), the graph is expressed as y=389.41x+(36848.68). As a result, for every job evaluation point added the mean base wage
increases by $389.41, and then $36,848.68 is subtracted. The R-Squared for this graph is
0.676, meaning the accuracy is fairly low. Part of the reason for this may be a result of
the inaccurately matched FastCat jobs to the benchmark jobs. Shown in Table 7, some
positions such as the Software Solutions Consultant have lower JE points but the data
shows they should be paid higher. Either our evaluation of JE points in Phase I were
15
inaccurate or there may be a better match for the FastCat job. This goes for the other
regression tables R-Squared as well.
Figure 1: Regression Graph - Medium Software
Figure 2 shows the regression graph for the small software companies. This graph is
expressed by the equation y=445.01x+(-44180.78). The R-Squared for this graph is even
lower than software medium companies at 0.604.
16
Figure 2: Regression Graph - Small Software
Figure 3 shows the regression graph for medium computer hardware companies. This
graph is expressed y=329.56x+(-10905.09) with an R-Squared of 0.547. This is the least
accurate regression that we found.
17
Figure 3: Regression Graph - Medium Hardware
Figure 4 shown below is for the small computer hardware companies regression. This
graph is expressed y=192.93x+2402.76. This has the most accurate R-Squared of 0.782.
Although this is the highest R-Squared we decided not to use this as the benchmark
because as shown in Table 10, it only has data for a few benchmark positions and we do
not feel it is enough to base our entire pay structure off of.
18
Figure 4: Regression Graph - Small Hardware
FASTCAT’S PAY POLICY LINE
Figure 5 shows FastCats’ two different pay policy lines. The green dotted line is lagging
the market by 5% and the black dotted line is leading the market by 5%. The red line
illustrates the average pay in the market. We decided to use the green dotted line as our
pay policy because we plan to lag the market in salary. We chose this option because
FastCat needs to focus on cutting labor costs and raising production. We did not want to
lag more than 5% because we felt that the employees would not be motivated if it were
any lower. Since we are lagging the market, we plan to give incentives for innovation and
high productivity in order to retain our valued employees.
19
Figure 5: FastCat’s Pay Policy Line - Small Software Companies
INTEGRATING INTERNAL AND EXTERNAL STRUCTURES
Bands and Zones
FastCat should lag the market by 5%. Integrating the pay structure with its external
competitors should be done using bands and zones which are successful in a more
flexible organizations. Although using grades is an easier system to administer, using
broad banding will allow the organization to take advantage of flexibility without
increasing labor costs.
A structure with bands and zones also encompasses pay ranges for specific categories of
jobs based on their individual responsibilities and tasks. For example, for all entry level
positions we would consider and set a specific range of pay, and for a job with increased
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responsibility comes a greater pay band. The advantage of choosing this structure allows
FastCat to manage and control compensation in the organization while leaving room for
rewarding individual performance.
Overlapping
When one band’s maximum salary overlaps the next band’s minimum salary, the
movement from the first band to the second band has to make sense. We need to be sure
that if the top paid person in the first band is paid more than the minimum paid person in
the next band, they actually deserve to be paid more because of their job requirements.
EVALUATING THE RESULTS
Below (Tables 11-14) are all the options we considered before choosing to use the small
software companies as the benchmark. We took each of the equations that were found in
Figures 1-4 and put in each of the 12 FastCat job evaluation points to find the mean base
wage of each position.
Table 11: Software - Medium
Benchmark Job
Engineering Manager 1
Engineer 4
Engineer 3
Marketing Manager 1
Office Support 6
Marketer 4
Technician 4
Office Support 5
Office Support 3
Marketer 1
Technician 2
Office Support 2
FastCat Job
JE Points Mean Base Wage
Senior Fellow
400
$118,915.32
Software User Interface Architect
370
$107,233.02
Software Developer
355
$101,391.87
Graphics Designer
340
$95,550.72
Administrative Leader
340
$95,550.72
Software Solutions Consultant
295
$78,027.27
Quality Assurance Analyst
265
$66,344.97
Green Guru
260
$64,397.92
Project Support Assistant
215
$46,874.47
Marketing Support
200
$41,033.32
Technician
180
$33,245.12
Administrative Aid
145
$19,615.77
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Table 12: Software - Small
Benchmark Job
Engineering Manager 1
Engineer 4
Engineer 3
Marketing Manager 1
Office Support 6
Marketer 4
Technician 4
Office Support 5
Office Support 3
Marketer 1
Technician 2
Office Support 2
FastCat Job
JE Points Mean Base Wage
Senior Fellow
400
$133,823.2
Software User Interface Architect
370
$120,472.9
Software Developer
355
$113,797.8
Graphics Designer
340
$107,122.6
Administrative Leader
340
$107,122.6
Software Solutions Consultant
295
$87,097.17
Quality Assurance Analyst
265
$73,746.87
Green Guru
260
$71,521.82
Project Support Assistant
215
$51,496.37
Marketing Support
200
$44,821.22
Technician
180
$35,921.02
Administrative Aid
145
$20,345.67
Table 13: Computer Hardware - Medium
Benchmark Job
FastCat Job
JE Points
Engineering Manager 1
Engineer 4
Senior Fellow
Software User Interface
Architect
Software Developer
Graphics
Designer
Administrative
Leader
Software Solutions Consultant
Quality Assurance Analyst
Green Guru
Project Support Assistant
Marketing Support
Technician
Administrative Aid
400
370
Mean Base
Wage
$120,918.91
$111,032.11
355
340
$106,088.71
$101,145.31
340
$101,145.31
295
265
260
215
200
180
145
$86,315.11
$76,428.31
$74,780.51
$59,950.31
$55,006.91
$48,415.71
$36,881.11
Engineer 3
Marketing Manager 1
Office Support 6
Marketer 4
Technician 4
Office Support 5
Office Support 3
Marketer 1
Technician 2
Office Support 2
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Table 14: Computer Hardware - Small
Benchmark Job
Engineering Manager 1
Engineer 4
Engineer 3
Marketing Manager 1
Office Support 6
Marketer 4
Technician 4
Office Support 5
Office Support 3
Marketer 1
Technician 2
Office Support 2
FastCat Job
Senior Fellow
Software User Interface Architect
Software Developer
Graphics Designer
Administrative Leader
Software Solutions Consultant
Quality Assurance Analyst
Green Guru
Project Support Assistant
Marketing Support
Technician
Administrative Aid
JE Points
400
370
355
340
340
295
265
260
215
200
180
145
Mean Base Wage
$79,574.76
$73,786.86
$70,892.91
$67,998.96
$67,998.96
$59,317.11
$53,529.21
$52,564.56
$43,882.71
$40,988.76
$37,130.16
$30,377.61
Description of Analysis
Table 15 below displays our pay structure. After comparing all the companies, we
decided to choose small software companies. Table 1 shows what jobs were matched. We
matched the job descriptions in the survey to the FastCat job descriptions. We analyzed
several forms of pay including base salary, total cash, total compensation, bonuses, and
stock options. We used the mean as the compensation metric in order to compare the pay
more accurately. Based on our analysis, some of FastCat’s competitors will be paying
their employees higher because we chose to lag the market.
We initially wanted to lag the market in all jobs by 5%. We chose the line that lags the
average market line because of FastCat’s goal to keep low costs. However, using this line
will make some specific jobs’ pay at FastCat lead the market because the benchmark jobs
were well below the average. FastCat will be able to keep their costs low but maintain
employee retention through bonuses, benefits, and other incentives. Bonuses allow the
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company to make a one time pay to an employee which is not guaranteed in their salary
every year. With these strategies, we believe FastCat will be capable of maintaining their
position in the market.
Table 15: A Picture of our Pay Structure
Current Job
Senior Fellow
Visionary Champion
Project Leader
Software User Interface Architect
Client Account Leader
Software Developer
Graphics Designer
Administrative Leader
Implementation Consultant
Senior Quality Assurance Analyst
Quality Assurance Analyst A
Software Solutions Consultant
Quality Assurance Analyst
Green Guru
Usability Engineer
User Interface Designer
Marketing Service Representative
Training Assistant
Project Support Assistant
Marketing Support
Technician
Administrative Assistant II
Travel Coordinator
Administrative Aid
JE Points
400
385
385
370
360
355
340
340
335
325
305
295
265
260
255
245
245
245
215
200
180
170
160
145
Average Pay Rate
$133,823.2
$127,148.1
$127,148.07
$120,472.9
$116,022.82
$113,797.8
$107,122.6
$107,122.6
$ 104,897.57
$ 100,447.47
$91,547.27
$87,097.17
$73,746.87
$71,521.82
$69,296.77
$64,846.67
$64,846.67
$64,846.67
$51,496.37
$44,821.22
$35,921.02
$31,470.92
$27,020.82
$20,345.67
5% Lag Pay Rate
$127,450.67
$121,093.40
$121,093.40
$114,736.10
$110,497.92
$108,378.86
$102,021.52
$102,021.52
$99,902.45
$95,664.26
$87,187.88
$82,949.69
$70,235.11
$68,116.02
$65,996.92
$61,758.73
$61,758.73
$61,758.73
$49,044.16
$42,686.88
$34,210.50
$29,972.30
$25,734.11
$19,376.83
FastCats’ Strategy and Rationale to Lag Pay Levels
Since our strategy focuses on keeping costs low, we suggest FastCat offer other
incentives to increase productivity on top of the salaries. Some of the options include,
bonuses, non-monetary benefits, and stock options. For example, stock options can be
helpful because employees who own stock may be motivated to be more productive in
order to keep the stock price rising.
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The objectives set in Phase I focus on an internally aligned job-based pay structure
including:
·
Promoting from within
·
Demand for greater efficiency and increased productivity
·
Improving employee relationships
·
Improving workflow between different departments
·
Constantly highlight creative ideas
·
Stress the importance of communication and employee engagement
FastCat recently switched from a hierarchal structure to a more flat internal organization
that focuses on the involvement of its employees. “A Partnership for Success” is
FastCat’s mission. It mainly focuses on customer and employee satisfaction by providing
value and encouraging innovation. The compensation system should be a source of
sustainable competitive advantage in order to be successful in the industry. Our proposed
internal structure integrates creativity and teamwork.
FastCat’s new approach to exceeding consumer expectations will need to involve
introducing new offerings to existing customers, reaching out to new healthcare
participants, and expanding FastCat globally. This compensation plan must motivate
employees to increase productivity and keep them committed to achieving their overall
mission towards success. Combining these values with the suggested pay structure, we
believe FastCat will have the tools for success.
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