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Submitted BY:
Ethan Becker-Menditto
Amie Brady
Chao-Ching Lien
Ulises Mariona
Carl Pitt
Executive Summary
FastCat will design a pay package that sets us apart from competitors by encompassing
a unique pay mix, and attractive pay levels. The pay mix includes base pay, short and
long term incentives, benefits, and bonuses. Benefits are offered universally throughout
but the other pay forms vary based on the job and goals of the organization to enhance
such things as productivity, innovation, and teamwork. This proves best considering
previous strategic decisions, and the cohesion with business and compensation
objectives. Benchmarking is imperative to get a look at the competition in order to have
an idea where and how FastCat fit. Included in this benchmark, jobs will be analyzed
and matched, pay levels explored, competitor structure and pay mixes examined.
Based on the research done on other companies we have decided to lead the market in
the marketing department, match in administration, and lag in both technical and
engineering departments. At different times the market, competitors, and employee
desires amongst other things may cause the strategies to change so we are prepared to
be flexible with such decisions by offering dissimilar pay mixes and altering the pay
levels when necessary.
Being involved in two relevant markets such as technology and medical makes it a little
challenging to compare competitors and find the top employees. Understanding the
market we are in helps to alleviate some problems. Problems may range from supply
and demand in regards to jobs needed to be filled and potential employees that
available and qualified to fill them. Along with supply and demand come how much we
are willing to pay and how much they are willing to accept. This is an important reason
for surveys and benchmarking mentioned earlier. We have been able to capture all
information concerning this topic to make our decisions. One thing that was done was
matching the jobs developed at FastCat with those of the competitors. In doing so we
discovered our pay levels and pay mixes that keeps us competitive externally and
aligned internally. An important way to make certain conclusions was to design surveys
in order to gain an array of knowledge and stay competitive with hopes of catapulting
FastCat’s success. Technology plays a major role in everything we do and expands our
reach. Developing compensation metrics to analyze and compute data about jobs and
pay from different sources is due to technology.
Policy lines shown in the graphs explain the percentiles in respect to FastCat in the
market for each of the departments. For example, we planned to lead the market in
marketing and we are in the 75th percentile while in engineering we are lagging as
planned in the 25th percentile. Therefore, the policy lines are consistent with the
strategies. These strategies include offering greater incentives such as bonuses and
stock to engineers to increase productivity, hence, lagging in base pay, which will match
or surpass competitor’s total compensation given highly productive engineering.
Particular jobs have certain grades that can be seen when viewing the graphs. Those
jobs with the same grades are equal in base pay, e.g. senior fellow and visionary
champion for administration duties.
Recommend Strategy for Competitiveness
In Phase I, we presented several recommendations for how to improve the internal structure of
FastCat by focusing of its business strategy, values, and other Human Resource (HR) systems.
The internal plan promoted five compensable factors determined: Education/Experience,
Innovativeness, Teamwork, Technical Requirements, and Responsibility Requirements. In the
next phase, we will explain how we analyzed the market and propose a few additional
recommendations about how to compensate employees in comparison to the external market. It
is important to evaluate the internal and external market in order to stay competitive in the
market, however; it is important to remain within FastCat’s budget as well.
Evaluating the Alternatives
FastCat’s compensation strategy must adapt to the changes that continually take place in the
marketplace in order to stay ahead of the curve. The company is expanding, however, based on
our analysis, the company has expanded too rapidly without considering all other factors first.
Strategic goals and direction could be an advantage for the company. In contrast, improperly
implemented or wrongly directed decisions could also be extremely detrimental. Bad decisions
about the future of a company jeopardize its position in the marketplace. For that reason, we
suggest that the company adjusts and reinforces its proposed corporate objectives.
Compensation Strategy
A comprehensive compensation strategy that is aligned with its corporate values and strategic
objectives will in turn further the company’s sales and promotes future business. Currently,
FastCat does not provide any incentives. If a company fails to recognize contributors efforts set
forth, productivity could drop, and the internal climate of the company could change negatively.
Short-turn and long-term rewards are a way to create incentives for employees and promote a
greater atmosphere. Performance targets will be set for individual employees, teams, and the
entire organization. If targets are met, incentives will be paid. By satisfying employees with its
compensation packages will promote as well as support sustainability and longevity in the
corporation.
Setting Pay-level Policy
Setting the compensation policy is one of the most critical decisions in designing FastCat’s
compensation plan because decisions regarding the pay-level, pay mix, and structures directly
influence labor costs and signal FastCat values to the market. Collecting information and making
judgments about the compensation paid by other employees will help FastCat gain a competitive
intelligence. We propose a compensation strategy that will help FastCat employees achieve its
performance objectives, reduce labor costs, retain talented individuals, and comply with
legislative issues worldwide.
Purpose of the Surveys
Compensation surveys help firms adjust pay levels, design new forms and structures, address
special situations, and estimate competitor’s labor costs. Compensation consultants should tailor
the level of detail and data used in their surveys to meet their purposes. This requires creating
new structures and establishing new pay levels. It is important that FastCat consider the external
market before pursing the recommended strategies; the surveys will provide support for our
recommendations and allow the company to make informed decisions via market analysis. It is
important to evaluate all compensate measures and understand how other companies are
compensating its workforce. Otherwise, our employees will eventually become our competition.
Analyzing the Market
The first step in phase II is to select the correct data to benchmark all of the jobs at FastCat. First,
we will match all of the FastCat jobs as accurately as possible with the data provided under the
benchmark jobs. Next, we will reintroduce the Job Evaluation (JE) points score for each job and
use the information presented in Phase 1 in order to keep things as consistent as possible. As
before, we will use the same structure previously provided and divided the jobs into four
categories: Administrative, Engineering, Technical, and Marketing. Next, we will perform
several surveys to delve deeper into the data and analyze other aspects of the market by
determining the relevant labor markets occupation, geography, and competitors. Please find
below FastCat’s market line, which provides a line-of-sight and signals success in our results.
Figure. FastCat’s Market Line
300
250
200
150
y = 11.153x
R² = 0.6328
100
FastCat's Market Line
Designing a Survey
Designing a survey includes a number of steps:
Linear (FastCat's Market Line)
Project Leader
Client Account Leader
Senior Fellow
Senior Quality Assurance Tech
Vision Champion
Graphic Designer
Software Developer
Usuability Engineer
User Interface Designer
Software Solutions Consultant
Adminstrative Leader
Quality Assurance Analyst A
Quality Assurance Analyst
Marketing Services Rep
Green Guru
Adminstrative Assistant 2
Implementation Consultant
Training Assistant
Marketing Support
Adminstrative Aide
Technician
Project Support Assistant
Travel Coordinator
0
Software User Interface…
50
A. Select Benchmark Jobs and match survey jobs with FastCat jobs
After reviewing the information for benchmark job provided by the software, we felt that it
would be necessary to group some of the jobs together. Based on the criterion that was
recommended for FastCat’s objectives and JE points determined in Phase 1, we believe that
some of the jobs are valued the same, while others are slightly more or less. With that
information in mind, we decided to group some of the jobs together into the same categories,
such as the Project Support Assistant and Travel Coordinator, Administrative Aide & Training
Assistant, and Administrative Assistant II and Green Guru. An overview of all of the survey jobs
in the software matched with all FastCat job titles/positions located in figure 1..
Match with FastCat Jobs
Survey Job
FastCat Match
Office Support 1
Office Support 2
Office Support 3
Office Support 4
Office Support 5
Office Support 6
Marketer 1
Marketer 2
Marketer 4
Marketer 5
Marketing Manager 2
Technician 1
Technician 2
Technician 3
Technician 4
Technician 5
Engineer 1
Engineer 2
Engineer 3
Engineer 4
Engineer Manager 1
Project Support Assistant & Travel Coordinator
Administrative Aide & Training Assistant
Administrative Assistant II & Green Guru
Administrative Leader
Visionary Champion
Senior Fellow
Marketing Support
Marketing Service Representative
Software Solution Consultant
Graphic Designer
Client Account Leader
Technician
Implementation Consultant
Quality Assurance Analyst
Quality Assurance Analyst A
Senior Quality Assurance Technician
User Interface Designer
Usability Engineer
Software User Interface Architect
Software Developer
Project Leader
Please keep in mind, we are not suggesting that these jobs should be compensated the same;
however, we would like to briefly note that these adjustments must been be taken into
consideration and adjusted accordingly. We will go into further detail about these adjustments in
the pay-level section.
B. Selecting the Right Competitors
Initially, we compared all of the companies in the market. Next, we decided to narrow our search
and pick out the top four companies that were most similar to FastCat and in the same industry.
Information for sixty companies in FastCat’s geographical area was provided by the software.
There were small companies (less than 400 employees) medium companies (between 400 and
1,000), and large companies (over 1,000 employees). Several industries included computer and
hardware, semiconductors, software, financial and manufacturing. We understand that FastCat is
currently a small business; however, we felt that it would be best to compared the four
companies that were medium-sized instead since productivity is steadily increasing. As a result,
the new compensation strategy will need to be adjusted. Please find the summarized results
below of the specific companies that we felt were the most comparable to FastCat’s operations.
Table 1. Comparison of FastCat Competitors Compensation Packages
Network Services &
Company Web Based IT
4
10
33
ROA
Medical Technology -11.98
Application &
Software
Medical Technology -0.02
Application
Software
Medical Technology 6.58
Benefits/
Base Salary/
Base
Compensation Salary
0.87
0.14
Stock
Options/ Base
Salary
0
Bonus/
Base
Salary
0
0.87
0.14
0.01
0
0.72
0.08
0.2
0.12
47
Health Insurance
Systems
18.21
0.79
0.14
0.05
0.08
Decide which pay forms to compare:
The Base/Total Compensation percentage in the marketplace is .80. Companies 4, 10, 33,47
compensation percentages are very close to this figure. Using this figure will help us match the
market more closely.
Decide which Compensation Metric to Use:
After reviewing the external data we decided to vary the forms of compensation by using
different pay-levels and pay-mix for each department. By using different compensation metrics
will allow us to grab a better grasp of the market. FastCat should have a different pay level
policy for different types of work (i.e. pay above the market for engineers and markets and match
the market for administrative and technical work.
Figure. FastCat job Based on JE points
D. Understanding the Results:
By entering in all of the jobs at FastCat we can see a perceptive of FastCat overall position
relative to the market. Using the Market Measure base wage mean the R-squared was a little shy
of 0.5, which is what we were trying to accomplish. Based on FastCat’s base pay, there are many
positions that meeting and lagging the market, while other positions are leading the market.
Please find the summarized results of FastCat in the market in comparison with its competitors.
At first, this chart may seem unfair. However, we plan to make any necessary adjustments via
mixed pay-level. We would rather FastCat employees be satisfied with their full compensation
plan, rather than just certain aspects of it. Provided below is a regression graph of all of the jobs
at FastCat in comparison to the external market.
E. Evaluate the “fit” between FastCat and its market:
We would explain the short and long-term incentives as well as the rewards and benefits provide
for each department more in detail throughout the rest of the analysis.
Here is a brief synopsis of our plans:


Engineers and Marketing departments - leading the market with higher incentives in the
short and long-term based on their performance.
Technical and Administrative departments - match the market
Engineer Department
In the Engineering department we would like to lag pay to increase productivity by offering
higher incentives in the short and long-term. For instance, lump sum bonuses will be granted for
individual performance achievements to recognize short-term achievements. These bonuses will
increase productivity and allow the engineering department to see better future rates based upon
their production. In this case, the base pay will be lagging but the potential amounts of overall
compensation could be higher based on high productivity, which will allow the employee to
obtain the lump sum bonuses as well as provided employee stocks. Stock options will be used as
long-term incentives and give the engineers a real sense of ownership of the company. In turn,
engineers’ investment in the company increases the innovation and quality of work. The more
productive employees are, the higher the revenue for the company, and the greater their return.
Further, we chose not to match or lead base pay because we did not want to attract newer
employees and possibly upset current employees. If we offer a higher base pay, we will be
unable to offer higher incentives for employee performance. Not to mention it will increase
overall fixed labor costs. Only 38% of the employees in the database received long-term
incentives, **% of the employees were …….
Provided below is a regression graph of the engineering DEPARTMENTS
MARKETLINE
Hindsight
There were some adjustments made after reviewing the market data that we originally
unforeseen. We decided that our Visionary Champion and Senior Fellow salaries need to be
adjusted. The Visionary champion base pay will need to be adjusted slightly less since it is
currently leading the market in base pay. Further. will make comparatively that same since the
Senior fellow lags market. Synopsis of the Engineering department: Lag the market for base,
plus bonus and stock options for excellence!!! Please find the summarized results of the
Engineering department below.
Table 1. Engineering Department Salaries
Engineer
Function
Project Leader
Software
Developer
Software User
Interface
Architect
Usability
Engineer
User Interface
Designer
Survey
job
Engineer
Manager 1
Engineer
4
Engineer
3
Engineer
2
Engineer
1
Total
Point
Base Salary
Bonus/Stock
option
Total
compensation
230
$109,322.19
5%/10%
$125,720.50
200
$88,442.53
5%/8%
$99,940.06
190
$73,471.84
4%/5%
$80,084.31
180
$64,858.56
3%/4%
$69,398.66
170
$53,112.98
2%/4%
$56,299.76
Administrative:
We plan to match the market in the administrative market due to the way jobs are structured. We
felt that match the market in order to retain and make the employees feel appreciated. It makes it
very difficult for us to provide employees with incentive pays due to the kind of jobs that they
are required to do, therefore; we will focus on offering higher benefits and non-incentive pay.
For instance, we will offer merit pay for long-term pay increases based upon longevity inside the
jobs and better job tenure the longer the individual is working the higher their long term salary
will become. Please find below the summarized results of the external administrative salaries.
Administrative Department Matching the Marketing
Administrative
Function
Senior Fellow
*Visionary
Champion
Administrative
Leader
Green Guru
Administrative
Assistant 2
Training
Assistant
Administrative
Aid
Project Support
Assistant
Travel
Coordinator
Survey
job
Office
support 6
Office
support 5
Office
support 4
Office
support 3
Office
support 2
Office
support 1
Total
Point
Base Salary
Bonus/ Stock
Options
Total
Compensation
230
$54,405.61
6%/ 1%
$64,173.19
210
$54,330.81
6%/ 1%
$64,992.99
160
$46,938.95
4%/ 1%
$56,798.31
$39,592.46
3%/ 2%
$48,882.77
$31,132.57
3%/ 2%
$39,030.98
$29,210.62
1%/ 2%
$35,531.93
130
110
110
90
80
70
We have decided not to lag the market because this will not attract or retain good employees due
to competition. Further, we do not want to lead the market because the focus of FastCat is on
innovation and product design. Leading the market in administrative pay will not leave room
for growth and development.
Marketing:
We recommend the market in base wage for the marketing department, however, leading the
market in total compensation in order to maximize the ability to attract and retain quality
employees and minimizes employee dissatisfaction with pay. Due to FastCat competing with
higher other companies we want to attract the best marketers in the market in order to increase
our brand name and also increase the marketing talent on our team. We recommend
implementing a policy line with 5 percent of the market. This will help us in the long-term by
enhancing our marketing department.
Figure. Marketing Department Leading the Market in base pay.
We choose do not want to lag the market because offering a lower base pay will not be as
effective in regards to motivation. We also do not recommend matching the market because we
want to provide employees with an incentive to remain with our company. Figure 1. Reveals the
Marketing departments figures summarized.
Marketing Department Leading the Market Salaries:
Marketing
Function
Client Account
Leader
Graphic
Designer
Software
Solution
Consultant
Marketing
Service
Representative
Marketing
Support
Survey
job
Marketing
Manager
2
Marketing
5
Total
Point
Base Salary
Bonus/ Stock
Option
Total
Compensation
230
$140,225.56
6%/ 4%
$156,016.08
200
$123,491.32
14%/ 6%
$155,994.23
Marketing
4
160
$95,044.28
11%/ 4%
$108,008.51
Marketing
2
140
$68,205.82
14%/5%
$77,369.29
Marketing
1
100
$53,452.08
14%/ 8%
$62,213.73
Technical:
We would want to lead the market in order to maximize the ability to attract and retain quality
employees and minimizes employee dissatisfaction with pay. By doing so, we will have higher
and better business professionals that could teach the younger individuals in our technical
department how to increase efficiencies and overall increase knowledge and productivity.
Due to Fast cat competing with higher other companies we want to attract the best technical
worker in the market. Just like we have stated in Marketing we do not want to lag the market in
our technical department because offering a lower base pay will not be as effective in regards to
motivation. We do not want to match the market because we want to provide employees with an
incentive to remain with our company.
Integrate the External and Internal Structure
We integrated FastCat internal structure via the use of grades and ranges/bands and zones.
This structure was the most accommodating. Initially we decided to make a few
preliminary judgments based on what we have learned in the Compensation textbook.
However, sometimes strategies change a bit after performing a market analysis and
analyzing the market.
Technician Department Lagging the Market
Technician
Function
Senior Quality
Assurance
Technician
Quality
Assurance
Analyst A
Quality
Assurance
Analyst
Implementation
Consultant
Technician
Survey
job
Tota
l
Poin
t
Base Salary
Bonus/ Stock
Options
Total
Compensation
Technicia
n5
220
$58,047.50
11%/ 4%
$69,242.75
Technicia
n4
150
$48,596.55
8%/ 6%
$61,065.11
Technicia
n3
140
$41,092.67
7%/ 7%
$53,122.04
110
$32,278.59
6%/ 8%
$41,389.12
90
$29, 539.08
3%/ 0%
$35,252.23
Technicia
n2
Technicia
n1
Future Recommendations
Markets continue to fluctuate; therefore, FastCat’s must evaluate and adjust compensation plans
continuously at least once per year at the most. For that reason, it is the upmost importance that
FastCat monitor its external market. In fact, we recommend signing up for our monthly,
quarterly, or yearly reports to receive the most up-to-date information about the market. In the
event that any changes may occur, please feel free to contact us with further assistance.
Sometimes it is best to make small incremental changes to compensation plans rather than drastic
changes. This allows the company to make the necessary adjustments that they see fit, while
maintaining employee satisfaction. It is expect that changes will continue to arise due to the fastpaced environment and complex industry that FastCat is involved.
Finalizing FastCat’s Compensation Plan
FastCat will use a variety of pay forms for each departments. Some groups must be group
together as explained earlier in the beginning of Phase 2. We recommend making the necessary
changes in order for FastCat to sustain its current market position, especially since current labor
costs are extremely high. If these issues are not addressed to the market fixed labor costs will
continue to increase, which will burden the company financially. Further, the company will be
unable to successfully expand to other geographic locations. We believe that overall, our propose
compensation strategy approach better well-matched for FastCat after considering its values,
objectives, and overall mission of the company. Further, the company will be able to support its
performance objectives, attract and retain talent, control labor costs, and comply with legislation,
while maintaining a stable place in the market. In Phase III, we will discuss further develop the
proposed incentives plans in order to complete FastCat’s total compensation plan.