FastCat Case Final Draft

FastCat Case

Samuel Lollar &

London Graves

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Table of Contents TITLE PAGE # PHASE I……………………………………………………………………………………………………………………. 3 Executive Summary……………………………………………………………………………………………… 4 Strategies and Objectives……………………………………………………………………………………… 5 Recommendation of Internal Structure for Job-‐Based Structures…………………………… 9 Technical Factors…………………………………………………………………………………………………. 10 Technical Jobs Evaluation…………………………………………………………………………………….. 16 Administrative Factors…………………………………………………………………………………………. 21 Administrative Jobs Evaluation……………………………………………………………………………... 29 Recommend an Implementation Plan…………………………………………………………………... 35 Summary and Rationale……………………………………………………………………………………….. 37 PHASE II…………………………………………………………………………………………………………………… 38 Executive Summary……………………………………………………………………………………………… 39 Strategy for Competitiveness……………………………………………………………………………….. 40 Survey of Total Compensation at FastCat’s Competitors………………………………………… 43 Pay Policy Line……………………………………………………………………………………………………… 70 Integration of Internal and External Structures………………………………………………………. 72 Evaluation of Decisions………………………………………………………………………………………… 76

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Phase I

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Executive Summary

FastCat is a business-‐to-‐business software company that operates in a highly specialized

and technologically advanced industry. The company’s main objective is to maintain this

leading edge, which will be accomplished through the attracting, acquiring, and retaining of top

talent. In order to succeed in this rapidly changing economic environment, FastCat needs to

position itself advantageously in the marketplace. By doing so, FastCat will increase revenue

and attract new customers.

We recommended that FastCat use a flexible internal structure with the jobs broken up

into two job families: technical and administrative. We also propose that FastCat use a job-‐

based plan for both job families with weighted compensable factors for each.

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Strategies and Objectives

FastCat Objectives:

FastCat will need to focus on exceeding current customers’ expectations while

enticing new customers to join with them. They will do this through high levels of

innovation and teamwork within each job family. FastCat will also need to be more

flexible in the products they offer to customers. Being flexible in this company will mean

allowing the customers to “create” what type of software that will work best for their

company. Being flexible will make them more appealing to new customers because the

software will almost be designed specifically towards the clients’ organizations. By

doing this, FastCat will be able to work with customers as they move through different

stages of development and implementation of the FastCat software. Another way to

increase customer satisfaction is to create software that is cost-‐effective over time for

the customer. The customer should feel that the software is paying for itself over time,

thus making the software valuable to the client’s organization. This will make the

FastCat software more appealing to customers over its competitors because it will be

seen as more valuable to their businesses. If the software is seen as valuable FastCat’s

services will also be valuable and thus making it easier for them to pay labor costs of

their workers.

To create a strategic advantage, FastCat must focus on:

A. Creativity/Innovation — FastCat must maintain a superior product compared to

its competition. By doing so, FastCat will increase the need for creativity and

innovation within the company. This will ensure that its employees are coming

up with new ideas for software that is not currently on the market, which will

make FastCat’s software more appealing to the customer base.

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B. Team Work — Each job family within the FastCat Company will be required to

work as a team. By creating a team work attitude employees will feel a sense of

obligation to the company. By doing so, FastCat will be able to run more

efficiently and will be able to create and maintain a competitive advantage.

C. Employee Morale — FastCat must direct focus on the energy that its employees

bring to the table. By encouraging employees to be committed to their

organization, FastCat will be able to attract and retain talented employees.

D. New Markets — Three industries will purchase the FastCat software. These

industries include financial services, healthcare, and insurance industries. By

serving these markets, FastCat will be able to increase their customer base while

also increasing revenue.

How Tight to Tailor (How many structures)?

We recommend FastCat use a compensation system that includes two structures

(families), technical and administrative. The advantage of setting up the company’s jobs

this way is to increase communication between the departments of the organization.

Communication is key to the survive of the company and by implementing this

compensation plan FastCat’s communication will be enhanced because the two job

families will have employees that work closely together within family. It will also create

more equitable treatment among employees at each level. This is because similar jobs

will be grouped together and positioned according to the job’s level within the job

family. Individual jobs will not be compared to jobs that are not similar. By having few

structures within the organization, it can help increase overall employee satisfaction

within the company and help the company increase retention of their employees. This

is because employees perception of their pay is limited to the job family that their

position is place in. They will not be able to compare their pay to another of a different

family because it is not similar. The employees will have a new sense of commitment to

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FastCat and will be more determined to increase their individual as well as group

productivity.

Job Evaluation Committee and Subject Matter Experts for Both Families

The two jobs families were designed by a small group of subject matter experts of

an independent company. A total of six subject matter experts were assigned to the

committee and they came up with a division of the two families. This grouping divides

the jobs within FastCat by the areas of focus for that positon. If the focus of a job was on

the technical side, then it went in the technical family. The same was true for the

administrative jobs.

Technical Jobs Administrative Jobs

Senior Fellow Visionary Champion

Project Leader Client Account Leader

Software User Interface Architect Software Solutions Consultant

User Interface Designer Marketing Service Rep

Software Engineer Marketing Support

Senior Quality Assurance Technician Administrative Leader

Programmer Analyst Implementation Consultant

Quality Assurance Analyst Clinical Liaison

Quality Assurance Analyst A Project Support Assistant

Technician Training Assistant

Graphics Designer Administrative Assistant II

Administrative Aide

Travel Coordinator

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Hierarchical versus Flat

We recommend that FastCat have a relatively flat pay system. Having a flat pay

system means having fewer levels and smaller differentials between adjacent levels and

between highest-‐ and lowest-‐paid workers. It is because of the smaller differentials of a

flat pay system that will allow FastCat’s employees to freely communicate with other

employees in different family divisions. This is because the chain of command will be

small and employees will be able to get important information to many people across

levels relatively quickly. Many other competitors use this system as well, such as google

and yahoo, and it has worked very well for them in the industry.

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Recommendation of Internal Structure for Job-‐Based Structures

We recommend that FastCat use two plans to evaluate jobs within the

organization. It is in FastCat’s best interest to evaluate the two families (technical and

administrative) separately because it is the best way to ensure that all jobs are

accurately described on factors that are important and specific to the work within the

family.

The team of subject matter experts that divided the jobs into two families also

designed the compensable factors for the families. The six subject matter experts talked

with personnel of both families and discussed with them what were important factors to

have within the job positions. After talking with personnel, they designed the

compensable factors for the families and their weights. Each job within each family was

then ranked on a point factor system. The factor weights for that family and the degree

of those factors were multiple together to give each job position a point value. Where

this point value is placed within that family determines the level of pay for the position.

For this compensation plan, both families are evaluated on a job-‐based structure and

not a person-‐based structure. Compensable factors and weights for each family are

presented below.

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Technical Factors

Factor Weight

General Knowledge 25%

Product Development Skills 22%

Communication 20%

Decision Making 13%

Supervisory Responsibility 10%

Testing Analysis 10%

Total 100%

The reasoning behind the weights of each compensable factors is as follows:

The reason general knowledge ranked number one is because the jobs within the

technical family rely heavily on knowledge learned while in school, work experience, and

computer expertise. Most of the positions within the technical family are responsible

for maintaining computer systems and creating products for the customers that provide

a solution. Product development skills are second most important to this job family

because these are the skills required to gather the information, that leads to innovative

ways in which current products can be made more effective for customers, and develop

new products when the market demands solutions to problems. Innovation of products

is a key to success of the company because these skills are necessary to create new

markets or expanding markets to generate a larger revenue. Communication was the

third most important factor because effective communication about the needs of our

customers is essential in order for our products to meet their demands. It is also

imperative that the jobs within the technical family communicate amongst each other

to determine what is being done within the department to meet the needs of the

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customers. Decision-‐making, supervisory responsibility, testing, and analysis are all

important for this department to run efficiently; however, they are not the most

important factors in contributing directly to meeting the company’s goals, mission, and

strategy.

Compensable Factors and their Degrees: General Knowledge

Degree Description 1 No degree or experience required 2 Position requires a High School Diploma

or G.E.D. and at least six months to one year of relevant work experience

3 Position requires an Associate’s degree in a related field and/or one to three years of relevant work experience

4 Position requires a Bachelors Degree in a related field and/or one to three years of relevant work experience.

5 Position requires a Masters Degree or higher in a related feild and one to five years of relevant work experience

Product Development Skills

Degree Description 1 Never needs to come up with new

products 2 Seldom needs to come up with new

products 3 Upon occasion needs to contribute to

new products 4 Frequently needs to contribute to new

products 5 Needs to contribute to new products on a

daily basis

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Communication

Degree Description 1 Position requires minimal oral, written,

and graphic communication. 2 Position requires minimal oral, written,

and/or graphic communication, duties primarily involve delivering and filing information within own department.

3 Position requires directed oral, written, and/or graphic communication. Nature of communication is primarily limited to transmitting routine information, describing and/or explaining simple or routine processes, or dealing with low-‐level procurement questions.

4 Position requires regular verbal, written, and/or graphical communication within own department and across other departments to describe, explain, and advise others regarding daily tasks. Position provides detailed explanations of projects, assignments, problems and solutions to others as necessary.

5 Position requires interaction with all levels within the organization, uses oral, written, and/or graphic communication to describe, explain, persuade, and negotiate. Position requires relaying the meaning of new ideas, products, policies, and procedures that may affect multiple or all areas of the internal operations of the organization.

Decision Making

Degree Description 1 Follows clearly prescribed standard

practices and involves straightforward application of the practices

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2 Frequently confronts problems not covered by job routine; independent judgment is exercised in making minor decisions

3 Exercises independent judgment in making decisions involving non-‐routine problems with general guidance

4 Uses independent judgment in making decisions that are subject to review in the final stages only

5 Uses independent judgment in making decisions that are not subject to review

Supervisory Responsibility

Degree Description 1 Position exercises no supervisory

responsibilities over other positions or co-‐workers.

2 Position occasionally guides and leads others but does not determine work assignments, priorities, and methods to be used. Position does not appraise work group members.

3 Position engages in functional supervision, delegates tasks and duties to subordinates, sets team goals, acts as an information source, determines methods, procedures, or materials to be used, and evaluates performance of team members.

4 Position requires functional supervisory responsibility and is held accountable for performance, quantity and quality of work, costs, methods, and discipline of several work groups or departments. Position requires appraisal or formal performance review of team leaders and supervisors.

5 Position supervises and directs the work of multiple departments or divisions.

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Position recommends or approves personnel actions that have an effect on the company’s organizational objectives. Position supervises and evaluates department/unit directors.

Technical Analysis

Degree Description 1 Position makes little to no contribution to

testing and analyzing products and equipment. Position requires little or no basic understanding of technical knowledge of processes, theory, methods, procedures, and systems in order to successfully perform the basic functions of the job.

2 Position makes a modest indirect contribution to testing and research by assisting in routine testing and research. The position requires the ability to follow basic testing outlines or procedures. Position requires the application of basic knowledge regarding scientific, engineering, mathematical, and/or designing principles in order to successfully perform the basic functions of the job such as research, analysis, and troubleshooting. Position does not need to analyze or make recommendations based on the test results.

3 The position must have an understanding of test results and be able to organize and transfer the results. The position does not necessarily need to have the ability to interpret or make recommendations based on the test results. Position requires the use of in-‐depth knowledge and application of technical processes, theory, methods, procedures, and

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systems in order to perform assigned tasks such as research, analysis, and troubleshooting. Position is expected to understand and be able to explain the principles and attributes of advanced processes and techniques.

4 The position performs tests using various strategies, consults with engineers, and aids in special testing requests. Position requires extensive knowledge of products design features and potential limits. The position requires the knowledge and skills to analyze testing results and make recommendations. Position requires providing leadership to technical positions and requires expert knowledge of in-‐depth knowledge and application of advanced knowledge of technical fields, engineering methods, mathematical, statistical, programming processes, theories, methods and in order to successfully perform required tasks and responsibilities of the position. Application of knowledge is frequent, in-‐depth, and of a comprehensive (big picture perspective) to perform primary activities of product and systems development and design. Position requires extensive knowledge of company testing procedures. Position develops and initiates the methods and procedures for inspection, testing, and evaluation and coordinates the work of other positions to carry out testing procedures. The position is responsible for implementing decisions and recommendations.

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Technical Jobs Evaluation Senior Fellow

Factor Weight Degree Total

General Knowledge 25% 5 125


22% 5 110

Communication 20% 5 100

Decision Making 13% 5 65

Supervisory

Responsibility

10% 5 50

Testing Analysis 10% 5 50

Total 100% 500

Project Leader




22% 4 88



Supervisory

Responsibility

10% 5 50


Total 100% 468

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Software User Interface Architect




22% 5 110



Supervisory

Responsibility

10% 5 50


Total 100% 462

User Interface Designer




22% 4 88



Supervisory

Responsibility

10% 4 40


Total 100% 407

Software Engineer



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22% 5 110



Supervisory

Responsibility

10% 3 30


Total 100% 419

Senior Quality Assurance Technician




22% 4 88



Supervisory

Responsibility

10% 4 40


Total 100% 332

Programmer Analyst




22% 2 44



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Supervisory

Responsibility

10% 5 50


Total 100% 349

Quality Assurance Analyst




22% 3 66



Supervisory

Responsibility

10% 2 20


Total 100% 303

Quality Assurance Analyst A




22% 2 44



Supervisory

Responsibility

10% 2 20


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Total 100% 328

Technician




22% 1 22



Supervisory

Responsibility

10% 5 50


Total 100% 245

Graphics Designer




22% 4 88



Supervisory

Responsibility

10% 5 50


Total 100% 387

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Administrative Factors

Factor Weight

Communication 25%

Records and Reports 25%

Supervisory Requirements 15%

Teamwork 15%

Job Complexity 10%

Knowledge 10%

Total 100%

Compensable Factor Weight Rationale:

The reason why communication is important to the administrative family is

because the jobs within the administrative family rely heavily on internal

communication with employees to ensure understanding of processes, procedures, and

products. The positions within the administrative family rely on external

communication with customers, vendors, and suppliers to ensure proper deliveries,

bring in customers, ensure that current customers are satisfied with the products

received, and relay information collected from customers to the technical family. This

job family is focused more on the people aspect of the company such as taking care of

customers and aligning employees according to the company strategy. Records and

reports was also given 25% because proper and accurate information with regards to

products, procedures, and statements is essential to good internal and external

communication. It was also determined that while knowledge (education and computer

expertise) is important to performing the jobs within the administrative family properly,

it is not the most essential factor. Also, factors such as teamwork and decision-‐making

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are important to the essential functions of the job such as prioritizing work and ensuring

a seamless flow of teamwork to get projects finished efficiently.

Compensable Factors and their Degrees: Communication

Degree Description 1 Position requires minimal oral, written,

and graphic communication only within the administrative family.

2 Position requires minimal oral, written, and/or graphic communication, duties primarily involve delivering and filing information within own department. This position requires very little communication with external sources. This means that communication is limited to relaying and getting messages to the other departments and answering calls or questions.

3 Position requires directed oral, written, and/or graphic communication. Nature of communication is primarily limited to transmitting routine information, describing and/or explaining simple or routine processes, or dealing with low-‐level procurement questions. This position requires limited or routine communication with external customer in order to perform the necessary job requirements. This might include arranging business travel, dealing with low-‐level customer services issues or complaints.

4 Position requires regular verbal, written, and/or graphical communication within own department and across other departments to describe, explain, and advise others regarding daily tasks.

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Position provides detailed explanations of projects, assignments, problems and solutions to others as necessary. This position requires more frequent communication with external customers/contacts in order to develop perspective processes and products that allow the company to achieve their goals. This position might include areas such as sales, research and development, and marketing.

5 Position requires interaction with all levels within the organization, uses high levels of oral, written, and/or graphic communication to describe, explain, persuade, and negotiate. Position requires relaying the meaning of new ideas, products, policies, and procedures that may affect multiple or all areas of the internal operations of the organization. Incumbents might deliver and come up with presentations or client demonstrations. They must organize and supervise external communication activities that will result in accomplishing company goals.

Records and Reports

Degree Description 1 Position has responsibility for

planning/maintaining of a few low-‐level records, plans, reports, projects, and documents. Errors made can be easily detected and corrected without substantial effort or effect.

2 Position has responsibility for the preparation/maintenance of several records, reports, projects, or documents. Errors made would result in minor

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confusion, delay, and/or possible monetary loss, generally at the departmental level.

3 Position has responsibility for the planning, preparation, and/or maintenance of a variety of records and reports that others use to make decisions. Errors would result in noticeable confusion, delay and/or monetary loss, usually on a departmental level.

4 Position has responsibility for planning, preparation, and/or maintenance of a variety of reports, plans, or organizational documents. Other employees who make decisions that affect a number or all departments in the company use these reports. Errors in these reports, plans, records, and/or organizational documents would result in noticeable confusion, damage to the reputation of one or more departments or divisions, noticeable monetary loss at the organizational level, or significant monetary loss at a departmental/divisional level.

5 Position has the responsibility for the preparation and/or maintenance of a variety of records, plans, reports, and organizational documents, which are used by others throughout the company for decision-‐making. Errors in the records, plans, reports, and other important organizational documents would create obvious confusion and significant damage to the organization’s reputation and/or significant monetary loss at an organizational level.

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Supervisory Requirements

Degree Description 1 Position exercises no supervisory

responsibilities over other positions or co-‐workers.

2 Position occasionally guides and leads others but does not determine work assignments, priorities, and methods to be used. Position does not appraise work group members.

3 Position engages in functional supervision, delegates tasks and duties to subordinates, sets team goals, acts as an information source, determines methods, procedures, or materials to be used, and evaluates performance of team members.

4 Position requires functional supervisory responsibility and is held accountable for performance, quantity and quality of work, costs, methods, and discipline of several work groups or departments. Position requires appraisal or formal performance review of team leaders and supervisors.

5 Position supervises and directs the work of multiple departments or divisions. Position recommends or approves personnel actions that have an effect on the company’s organizational objectives. Position supervises and evaluates department/unit directors.

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Teamwork

Degree Description 1 Position works alone. 2 Position works primarily alone in order to

complete tasks and assignments and does not depend on others. Position has no role in team activities, and others on the team do not depend on feedback from the position. Work output from the position could be used by groups to complete their assignments.

3 Position requires individual work but also contributes to a team. Position provides support in completing tasks but is not an integral part of the team or group. Completion of projects are done individually except in very rare circumstances and has no defined role in a team or group.

4 Position requires an integral role in teamwork including providing feedback, maintaining team goals, and communication. Position contributes to the team by giving input and guidance, introducing new ideas, brainstorming, providing feedback, support, and collaborating with various staff and departments.

5 Position has active teamwork responsibilities which include developing and organizing team members by providing coaching, training, and counseling, facilitating team development, resolving conflicts. Position may be held responsible for final team performance.

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Job Complexity

Degree Description 1 Position requires no judgment. 2 Position requires little or no judgment,

assignments are routine, and specific rules and procedures are detailed for most all responsibilities of the position.

3 Position applies judgment to follow and interpret work methods, policies, and/or procedures necessary to the responsibilities of the position. Problem solving is limited to choosing the solution from a set of prescribed methods. Supervisor approval may be necessary before making decisions that alter predetermined methods. Problem-‐solving usually encompasses only a single discipline.

4 Position applies judgment and/or research analysis to determine work approaches and to recommend courses of action where current methods or procedures must be modified in order to analyze and solve problems. Work assignments are varied and potentially encompass more than a single discipline. Position consults with supervisor as needed.

5 Position applies judgment to create, formulate, and evaluate operating policies, objectives, and systems in analyzing and solving problems. Position requires development of courses of action where no prior precedent exists and knowledge of more than a single discipline is often required. Position also requires advanced knowledge of problem solving skills.

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Knowledge

Degree Description 1 No degree or experience required 2 Position requires a High School Diploma

or G.E.D. and at least six months to one year of relevant work experience

3 Position requires an Associate’s degree in a related field and/or one to three years of relevant work experience

4 Position requires a Bachelors Degree in a related field and/or one to three years of relevant work experience.

5 Position requires a Masters Degree or higher in a related filed and one to five years of relevant work experience

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Administrative Job Evaluations

Visionary Champion



Records and Reports 25% 5 125


15% 5 75

Teamwork 15% 5 75

Job Complexity 10% 5 50

Knowledge 10% 5 50

Total 100% 500

Client Account Leader





15% 4 60

Teamwork 15% 5 75


Knowledge 10% 4 40

Total 100% 465

Software Solutions Consultant



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15% 3 45

Teamwork 15% 4 60


Knowledge 10% 4 40

Total 100% 375

Marketing Service Representative





15% 2 30

Teamwork 15% 5 75


Knowledge 10% 4 40

Total 100% 345

Marketing Support





15% 2 30

Teamwork 15% 5 75


Knowledge 10% 5 50

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Total 100% 335

Administrative Leader





15% 4 60

Teamwork 15% 4 60


Knowledge 10% 2 20

Total 100% 325

Implantation Consultant





15% 2 30

Teamwork 15% 4 45


Knowledge 10% 4 40

Total 100% 335

Clinical Liaison



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15% 2 30

Teamwork 15% 5 75


Knowledge 10% 4 40

Total 100% 315

Project Support Assistant





15% 1 15

Teamwork 15% 3 45


Knowledge 10% 2 20

Total 100% 300

Training Assistant





15% 1 15

Teamwork 15% 3 45


Knowledge 10% 4 40

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Total 100% 370

Administrative Assistant II





15% 1 15

Teamwork 15% 2 30


Knowledge 10% 1 10

Total 100% 235

Administrative Aide





15% 1 15

Teamwork 15% 2 30


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Knowledge 10% 2 20

Total 100% 200

Travel Coordinator





15% 1 15

Teamwork 15% 1 15


Knowledge 10% 2 20

Total 100% 210

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Recommend an Implementation Plan

The FastCat evaluation plan has been designed to support all organization strategies and

goals by the process of the compensation plan for each job family. . Implementing this new

compensation plan should not happen overnight. This will cause uneasiness in the staff and

could create issues with fully transitioning over from old to new. This is what the compensation

plan is trying to avoid. We suggest this new plan happen gradually. Start with changing the

administration family’s compensation. After this family has been settled, move on to the

technical family. Communication is key to a smooth transition. Everyone within the company

must communicate what is happening within their transition process with management and the

compensation committee of subject matter experts that helps design this structure while

trying to get to the new system. Communication should include concerns, problems,

achievements of new system, etc. If communication fails, this transition will not go smoothly.

In addition, all employees should be encouraged to get involved in the transition process.

Involvement will include sitting in on meetings and having the ability to contribute ideas for a

smooth transition for everyone.

This compensation plan will be flexible to handle new jobs or new job competencies as

they are created by looking at external market job descriptions and assessing where the new

jobs are to be placed. This is based on the assertion that new jobs will be created in the future

as the company expands and grows. When looking at the job descriptions, one should be able

to place them in either the technical or administrative job families by looking at what the new

job will entail and looking at the compensable factors for the two families. One the job family

has been determined one then assess each compensable factor of that family to determine

where the jobs will fall in the pay line.

Appeals Process

Once an employee files an appeal, located in the FastCat file database and accessible to

all employees through their work computers and their online log in, the compensation

committee will allow the appellant to review the group’s ratings and the justifications for each

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rating of the position. The committee then will inquire the individual’s justification of what

they have determined to be a problem. The process then will continue by allowing the

committee to hold a meeting without the appellant to allow for a discussion about the validity

of the argument and comparisons to current market research. The committee will then make

their decision and call the appellant into a new meeting to disclose their decision and allow for

questions.

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Summary and Rationale

FastCat will need to focus on exceeding current customers’ expectations while

enticing new customers to join with them. They will do this through high levels of

innovation and teamwork within the company. By implementing our compensation

plan, FastCat will be able to maintain and sustain a competitive advantage because it

will be meeting its objectives of being a leader of creativity and innovation, promoting

team work, improving employee morale, entering new markets, and marketing among a

changing customer base.

Our rationale behind the two job families is to create two distinct groups based

on job descriptions. These two groups perform tasks that are so different that, if they

were lumped into one big group, the compensation system would not achieve the

company’s objectives, and employee morale with the company would decrease because

of the perceptions of unfair pay among co-‐workers. In addition to creating the two

families, each family has different compensable factors that make up its pay level. By

separating these out, the company will to create a compensation system that is more

accurate based on what each job position entails because of the different compensable

factors of each family.

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Phase II

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Executive Summary

After researching and writing about FastCat’s internal structure and stating its strategies and

objectives in Phase I, we focused on gathering evidence on the market and FastCat’s competitors in

order to design a pay system that would work best. Because FastCat is a company that wishes to get the

highest level of production from its employees, we focused on designing a pay system that would

reward FastCat’s employees for their efforts. Therefore, we sought to create a pay system with high

incentives and lower base pay.

Since FastCat seeks employees that can be found in various industries such as computer

hardware, computer software, manufacturing, semiconductor, and financial services, we looked at the

market rates at all of these companies. We then chose the industry with the best market rates for

FastCat to base its compensation system on so that it would be sure to attract the top-‐notch engineers

and marketers. We then chose to use bands and zones in order to provide a more flexible pay system

that would work well with FastCat’s flatter structure and help to ensure that FastCat’s employees are

equitably paid.

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Strategy for Competitiveness Pay Strategy Alternatives:

In order for FastCat to meet its objectives and increase its performance, it is important for

FastCat to attract and retain top-‐notch employees. The three main areas that require

consideration in designing the right compensation system for FastCat include pay level, pay mix,

and the integration of FastCat’s internal and external structures.

Pay Level:

One consideration which must be made in order to select the best compensation system

for FastCat is how much FastCat should pay to each of its employees in salaries and wages and

how FastCat’s employees are compensated in relation to employees in other companies in its

labor market. A few alternatives that FastCat has in pay-‐level policies include a pay-‐with-‐

competition policy, a lead pay-‐level policy, and a lag pay-‐level policy. The pay-‐with-‐competition

policy matches the compensation rates of other companies within the same market and is

attractive because it helps a company to avoid union disputes and to have an equal chance at

attracting applicants as its competitors. Nevertheless, the pay-‐with-‐competition policy can fail at

providing a company with a competitive advantage. The lead pay-‐level policy helps to provide a

competitive advantage for a company by leading the compensation rates in a market. The lead

pay-‐level policy is able attract and retain top-‐notch employees and minimize overall employee

dissatisfaction with pay; however, it is expensive since the company using this policy has to

ensure that all employees are equally compensated to avoid internal misalignment. The lag pay-‐

level policy is a policy that pays below-‐market compensation rates to its employees which can

hinder a firm from being able to attract top-‐notch employees. However, a lag pay-‐level policy

works great if the company using this policy has a chance of earning higher profits in the future.

Because FastCat is a fairly small and new company in a growing industry, it is important

that it select a pay-‐level policy that will help it to attract the best engineers and marketers.

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However, since FastCat has employees that are more essential than others, one strategy that

would work well is to have a mixture of pay-‐level policies. They could do this by adopting a lead

pay-‐level policy for the marketing and engineering jobs and lag the market in the technician and

office support jobs. This would provide an incentive for its engineering personnel to develop

some of the best software in the industry and its marketing personnel to publicize the software.

Mix of Forms:

Another major consideration in selecting a compensation system that will work best for

FastCat is what pay mix, or forms of pay (including base pay, merit, and incentives), it should use

to compensate its employees. There are several types of pay mix policies which include

performance driven, market match, work/life balance, and security. The performance driven pay

mix policy focuses largely on compensating employees with benefits, bonuses, and stock

ownership programs and less on base pay. The performance driven pay mix policy would work

great with a company that is fairly new and has the potential to generate more profits in the long

run. The market match pay mix policy matches what the majority of competitors are paying and

focuses largely on base pay along with benefits and less on incentives and stock options. The

market match pay mix policy would work well with a typical company that has existed for a while

and generated a steady amount of revenues. The work/life balance pay mix policy focuses a

large amount on benefits and less on stock options, bonuses, or base pay. The work/life balance

pay mix policy would work well with a company who could offer its employees several benefits

but may not be able to afford to pay its employees a large amount in base pay. The security pay

mix policy focuses a very large amount on base pay with a good amount of benefits but no stock

options or bonuses. The security pay mix policy would work well with a company that generated

fairly steady revenues and wasn’t experiencing much growth.

FastCat is a relatively new company and is experiencing a growth in revenues and is

seeking to expand its market. However, at the same time, FastCat is also experiencing lower

productivity (revenue/employment costs) from its employees. Because of the mix of growing

revenues and declining productivity levels, the best pay mix policy for FastCat would be the

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performance driven pay mix policy. By using a performance driven pay mix policy, employees at

FastCat would feel a sense of ownership for the company and would be able to get rewarded

when FastCat does well. FastCat would also be able to compensate each employee more or less

depending on the employee’s contributions. This would help FastCat to attract and retain the

best employees while providing an incentive for the lower performing, less-‐paid employees to

find work elsewhere.

Integrating Internal and External Structures:

In developing an external pay structure for FastCat, it was important to also consider its

internal structure. As stated earlier in the report, FastCat needed to focus on four key objectives

in order to create a strategic advantage: creativity/innovation, team work, employee morale and

new markets. By implementing a mixed pay-‐level policy and a performance driven pay mix

policy, the employees at FastCat will have an incentive to perform their best in order to be better

compensated. Also, it would help FastCat to keep its labor costs in line with its revenues and

reward its higher-‐performing employees more than its lower-‐performing employees.

Another major consideration that was taken into account when devising an external pay

structure is whether to use grades and ranges or bands and zones. In order to help increase

communication among the employees and to provide an incentive for the employees to learn

about different aspects of the business, we decided to use bands and zones. Using bands and

zones will also help FastCat to remain more flexible as it seeks to expand its market nationally and

even internationally.

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Survey of Total Compensation at FastCat’s Competitors Job Matches:

One of the first steps that needed to be done in order to create a survey of total

compensation at FastCat’s competitors was to match the jobs at FastCat with Benchmark Jobs

that are found throughout FastCat’s industry. In order to do this, eleven technical jobs and ten

administrative FastCat jobs were selected and were compared to benchmark jobs in the industry.

However, there were three administrative jobs (Training Assistant, Implementation Consultant,

and Clinical Liaison) that were unable to be matched due to the fact that there were no close

matches between these jobs and the benchmark jobs. Also, the Job Evaluation (JE) points, which

were determined with the help of Subject Matter Experts, were considered in matching the jobs.

The following tables list the matches that were determined as well as comments for how the

FastCat jobs were similar to the chosen benchmark jobs. Finally, benchmark leveling was used to

ensure that the number of JE points assigned to each job was ranked in the same order as the job

titles and ranks of the technical benchmark jobs and the administrative benchmark jobs.

Technical Job Matches:

FastCat Job JE Points

Survey Job Match

Comments

Senior Fellow 500 Engineering Manager 3

Required to plan and conduct R&D projects of major significance and that require expert application of advanced knowledge. Manages product group to ensure timely delivery of high-‐quality products.

Project Leader 468 Engineering Manager 1

Responsible for all project communications related to technical issues. Supervises the

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design and development of software products.

Software User Interface Architect

462 Engineer 5 BS or MS in Computer Science plus substantial experience is required. Provides guidance to rest of technical team.

Software Engineer 419 Engineer 4 BS in Computer Science or related field plus several years of experience. Design and create engineering specifications for software. Involved in entire project cycle.

User Interface Designer

407 Engineer 3 BS in Computer Science plus substantial experience. Designs specifications for and performs programming and testing on new or existing large client implementation.

Graphics Designer 387 Engineer 2 BS in Design or related field plus experience is required. Defines and implements a unified design vision for interface and Web technologies.

Programmer Analyst 349 Engineer 1 BS in Engineering or Computer Science or equivalent experience. Using software specifications developed by software developers, create, modify, and test software.

Senior Quality Assurance Technician

332 Technician 4 AS in Computer Science plus 5 years experience. Responsible for assuring complete performance evaluation of all FastCat web applications through destructive testing.


328 Technician 3 AS in Business or Computer Science plus 3 years experience. Test company products using various testing strategies. Create and revise written procedures to accompany each test method.

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303 Technician 2 AS in Business or Computer Science plus some experience. Test FastCat software using various testing strategies. Assist with test environment preparation.

Technician 245 Technician 1 High school diploma or equivalent. Assist with testing FastCat software using common software testing strategies.

Administrative Job Matches:

FastCat Job JE Points

Survey Job Match

Comments

Visionary Champion 500 Marketing Manager 3

Define and ensure the success of new features/functions and planning overall strategy. Define customer needs.

Client Account Leader 465 Marketing Manager 2

Responsible for all aspects of the relationship with multiple FastCat clients. Direct all activities related to customer service, training and field support.

Software Solutions Consultant

375 Marketer 3 BS in Business or Computer Science plus minimum of 5 years experience is required. Develop accurate input for client proposals; assist account leaders in preparation of proposals.

Training Assistant 370 No Match Marketing Service Rep 345 Marketer 2 BS in Business related field plus

minimum of 3 years experience is required. Provides comprehensive and prompt information for marketing, sales, and engineering

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professionals. Marketing Support 335 Marketer 1 BS degree plus some

experience is required. Produces, distributes, and logs product quotations and revisions requested by marketing representatives.

Implementation Consultant

335 No Match

Administrative Leader 325 Office Support 6 AS in Business Administrative Studies is required. Responsible for the smooth operation of all administrative functions. Create project codes for department activities.

Clinical Liaison 315 No Match

Project Support Assistant 300 Office Support 4 Support project teams by handling administrative tasks. Keep Project Manager informed in order to keep on schedule and on budget.


235 Office Support 3 Track expenses and develop budget reports using FastCat internal web applications, Excel, and Access. Manage records and correspondence, improve systems when necessary

Travel Coordinator 210 Office Support 2 HS Diploma plus 1 to 2 years of experience. Responsible for booking all aspects of future travel via email, phone, or fax.

Administrative Aide 200 Office Support 1 HS diploma or equivalent. Provide word processing, faxing, copying, filing and other clerical support duties.

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Competitors in FastCat’s External Market:

In order to develop the best compensation strategy for FastCat, it is important to first

consider which market FastCat falls under, who FastCat’s competitors are, and how FastCat’s

competitors pay their employees. In order to determine which competitors to use in FastCat’s

external markets, 60 companies from the Computer Hardware (hardware), Computer Software

(software), Manufacturing (manufact), Semiconductor (semicdctr), and Financial Services

(financial) were selected. These companies were then compared based on their size (small,

medium, or large), their ratios of base salary to Total Compensation (Base/Total Comp), benefits

to base salary (Ben/Base), long term incentives to base salary (LTI/Base), and short term

incentives to base salary (STI/Base). In order to determine what the best rates in the labor

market were, we looked at the average wages for all of these companies together and then all of

the companies in each industry.

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All 60 Companies:

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The following tables show the means for the different forms of pay for all 60

companies with the benchmark jobs selected in the technical and administrative

categories.

Technical Jobs:

Survey Job Base Total Cash Total Comp Bonuses Stock Options

Engineering Manager 3

$166,647.49 $183,351.30 $282,973.16 $36,306.56 $127.912.59


$119,644.82 $128,153.70 $177,210.75 $24,014.89 $69,669.34

Engineer 5 $131,844.16 $139.109.52 $207,725.60 $14,096.78 $71,266.29

Engineer 4 $109,295.44 $114,400.16 $157,216.94 $12,366.63 $51,777.66

Engineer 3 $90,626.71 $94,123.29 $128,653.27 $10,065.35 $33,595.84

Engineer 2 $72,403.10 $74,836.29 $102,426.02 $5,461.41 $22,062.08

Engineer 1 $61,621.37 $63,435.79 $86,993.06 $2,823.93 $7,825.67

Technician 4 $46,669.93 $48,531.54 $69,950.76 $5,481.78 $5,296.90

Technician 3 $40,508.81 $41,937.96 $60,316.90 $4,803.42 $3,482.28

Technician 2 $33,506.17 $34,435.40 $51,408.85 $2,992.38 $2,507.44

Technician 1 $27,813.07 $28,558.48 $45,124.72 $1,960.78 $2,516.57

Administrative Jobs:


Marketing Manager 3

$159,597.63 $179,682.07 $261,780.77 $22,832.37 $58,056.84

Marketing Manager 2

$132,094.68 $144,384.79 $221,478.29 $221,478.29 $103,733.62

Marketer 3 $87,610.45 $92,283.16 $134,357.72 $7,740.32 $39,828.49

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Marketer 2 $68,935.70 $72,016.83 $100,343.97 $4,742.12 $22,034.70

Marketer 1 $57,580.95 $59,991.10 $82,840.4 $3,051.08 $10,184.17

Office Support 6

$52,982.37 $54,208.76 $76,902.60 $2,433.91 $1,894.53

Office Support 4

$48,746.23 $49,611.40 $68,887.94 $2,042.67 $1,301.44

Office Support 3

$42,304.30 $42,931.21 $59,883.41 $1,551.42 $669.76

Office Support 2

$34,783.18 $35,288.98 $51,148.44 $1,100.47 $834.76

Office Support 1

$28,585.15 $28,940.88 $43,530.08 $756.76 $813.75

Next, we decided to focus only on the companies that were in the computer software

industry. These companies are highlighted in the following table.

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Companies in Computer Software Industry:

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The following tables show the means for the different forms of pay for all of the

companies in the computer software industry with the benchmark jobs selected in the

technical and administrative categories.

Technical Jobs:



$170,982.31 $194,060.34 $330,598.12 $43,027.27 $149,049.70


$126,269.15 $136,717.91 $200,693.08 $24,932.57 $74,027.75

Engineer 5 $135,837.70 $143,852.15 $229,342.11 $13,662.69 $75,972.70

Engineer 4 $112,838.02 $118,527.69 $168.817.30 $14,016.36 $55,388.28

Engineer 3 $92,753.27 $96,758.01 $135,994.78 $10,795.30 $34,467.69

Engineer 2 $74,007.95 $76.794.98 $107,689.39 $5,956.30 $24,047.03

Engineer 1 $63,827.38 $66,007.77 $92,616.92 $3,117.40 $9,460.60

Technician 4 $46,144.10 $47,817.01 $70,298.38 $6,429.13 $4,686.18

Technician 3 $40,774.75 $42,068.02 $61,096.77 $5,570.69 $3,475.65

Technician 2 $34,184.92 $35,141.69 $52,377.91 $3,186.41 $2,416.75

Technician 1 $28,736.24 $29,570.51 $47,906.29 $2,099.58 $4,493.21



Marketing Manager 3

$157,916.16 $173,826.96 $260,853.18 $17,836.43 $45,940.39

Marketing Manager 2

$133,261.18 $143,568.35 $227,111.81 $9,737.20 $116,233.20

Marketer 3 $89,115.29 $93,891.25 $140,466.11 $7,676.93 $45,896.18 Marketer 2 $70,096.79 $72,981.61 $104,367.65 $4,933.35 $26,386.80

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Marketer 1 $56,358.36 $58,831.20 $83,080.82 $3,961.86 $11,293.00

Office Support 6

$54,310.31 $55,691.47 $79,896.68 $2,745.78 $1,852.70

Office Support 4

$50,153.38 $50,873.11 $70,438.14 $2,223.55 $1,113.15

Office Support 3

$43,417.85 $44,027.74 $61,917.73 $1,713.02 $669.00

Office Support 2

$35,737.52 $36,251.22 $52,593.30 $1,129.34 $859.68

Office Support 1

$29,074.09 $29,481.95 $44,978.89 $780.15 $1,552.69

Next, we decided to focus only on the companies that were in the financial

services industry. These companies are highlighted in the following table.

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Companies in Financial Services Industry:

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companies in the financial services industry with the benchmark jobs selected in the


Technical Jobs:



$144,897.90 $158,461.06 $218,379.16 $27,126.33 $45,640.00


$106,298.08 $121,722.51 $167,157.18 $15,214.69 $37,035.38

Engineer 5 $107,157.47 $127,194.31 $168,400.97 $20,036.85 $22,260.00

Engineer 4 $91,851.18 $100,803.49 $129,751.75 $13,032.32 $13,990.00

Engineer 3 $73,486.42 $79,035.81 $103,081.56 $7,738.16 $12,250.00

Engineer 2 $62,383.16 $66,251.93 $86,368.42 $6,364.79 $0

Engineer 1 $51,194.48 $53,148.18 $71,872.39 $2,493.17 $0

Technician 4 $46,582.33 $47,138.86 $68,099.72 $1,113.05 $7,060.00

Technician 3 $50,574.76 $50,574.76 $72,284.35 $0 $0

Technician 2 $35,315.67 $35,387.08 $53,892.64 $357.08 $7,990.00

Technician 1 $24,348.78 $24,348.78 $34,277.27 $0 $0



Marketing Manager 3

$167,046.90 $212,735.69 $321,733.76 $67,998.01 $213,671.11

Marketing Manager 2

$122,041.30 $144,760.99 $275,372.80 $27,806.91 $172,101.67


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Marketer 1 $56,950.99 $59,389.86 $81,536.97 $3,043.73 $13,720.00

Office Support 6

$49,606.82 $49,840.97 $70,325.97 $702.45 $1,750.00

Office Support 4

$42,284.06 $43,569.48 $58,472.14 $1,402.27 $1,382.00

Office Support 3

$40,527.46 $41,299.52 $55,541.95 $1,651.74 $660.00

Office Support 2

$35,054.24 $35,562.09 $50,804.31 $1,754.05 $1,830.00

Office Support 1

$23,915.58 $23,993.63 $35,250.37 $293.65 $0

Next, we decided to focus only on the companies that were in the computer hardware


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Companies in Computer Hardware Industry:

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companies in the computer hardware industry with the benchmark jobs selected in the


Technical Jobs:



$169,857.78 $179,886.26 $251,480.33 $15,797.05 $63,827.19


$119,937.59 $123,711.55 $152,759.46 $4,864.29 $9,096.82

Engineer 5 $133,002.76 $137,631.78 $208,268.07 $9,821.18 $73,321.48

Engineer 4 $108,459.76 $112,603.05 $153,794.44 $7,020.16 $43,412.70

Engineer 3 $89,242.27 $92,395.48 $125,699.94 $4,547.28 $36,163.16

Engineer 2 $72,588.71 $75,064.17 $101,371.20 $2,912.79 $19,074.20

Engineer 1 $63,032.47 $64,977.23 $87,067.97 $2,196.15 $6,645.00

Technician 4 $50,659.40 $53,523.10 $73,314.36 $4,682.37 $9,456.59

Technician 3 $41,399.65 $43,292.40 $60,240.04 $3,438.02 $3,311.25

Technician 2 $33,043.49 $34,091.92 $49,970.82 $2,468.35 $1,550.38

Technician 1 $26,588.79 $27,188.14 $42,351.28 $1,706.92 $1,078.53



Marketing Manager 3

$169,319.57 $187,128.57 $251,437.16 $24,092.01 $48,365.65

Marketing Manager 2

$134,630.98 $141,703.13 $207,142.96 $12,381.76 $67,700.00


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Marketer 1 $60,458.31 $62,691.87 $82,202.10 $4,076.65 $1,947.50

Office Support 6

$53,630.68 $54,443.97 $74,653.38 $1,070.45 $535.00

Office Support 4

$51,673.31 $53,035.81 $71,232.75 $2,038.53 $2,569.17

Office Support 3

$43,152.56 $43,779.13 $58,301.17 $1,493.16 $509.55

Office Support 2

$33,161.65 $33,620.76 $47,185.17 $1,025.69 $411.25

Office Support 1

$29,503.33 $30,003.93 $42,343.91 $741.87 $285.00

Next, we decided to focus only on the companies that were in the semiconductor


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Companies in Semiconductor Industry:

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companies in the semiconductor industry with the benchmark jobs selected in the


Technical Jobs:



$164,541.96 $169,605.75 $227,239.24 $8,393.94 $39,363.75


$108,459.68 $111,807.19 $137,135.11 $4,939.54 $4,342.50

Engineer 5 $133,459.82 $142,338.97 $190,967.95 $30,682.56 $47,424.46

Engineer 4 $114,157.24 $119,676.79 $154,249.01 $17,295.69 $26,152.23

Engineer 3 $95,389.15 $98,661.09 $127,022.50 $9,464.69 $17,336.48

Engineer 2 $74,881.27 $76,618.12 $98,685.98 $5,879.61 $8,140.11

Engineer 1 $63,967.64 $65,477.91 $86,519.90 $3,275.65 $3,941.67

Technician 4 $44,988.16 $47,322.39 $68,988.53 $2,623.16 $5,703.89

Technician 3 $41,508.11 $42,955.58 $61,194.94 $1,847.55 $3,780.68

Technician 2 $31,749.13 $32,997.38 $49,885.22 $2,028.02 $3,840.00

Technician 1 $27,647.97 $28,182.07 $42,693.50 $801.15 $2,160.00



Marketing Manager 3

$158,268.66 $186,837.72 $288,213.48 $25,678.20 $65,397.64

Marketing Manager 2

$142,442.04 $162,288.93 $227,568.68 $26,615.93 $51,369.24


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Marketer 1 $62,257.88 $64,318.09 $85,774.54 $2,167.51 $10,207.14

Office Support 6

$52,691.82 $54,618.64 $76,630.19 $3,023.18 $2,520.00

Office Support 4

$49,126.71 $50,260.74 $70,419.54 $1,518.82 $1,320.88

Office Support 3

$44,927.92 $45,620.63 $62,694.85 $868.24 $789.62

Office Support 2

$34,056.24 $34,666.04 $50,580.16 $1,034.97 $820.00

Office Support 1

$28,473.05 $28,607.45 $42,606.88 $352.80 $505.00

Finally, we decided to focus only on the companies that were in the manufacturing


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Companies in Manufacturing Industry:

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companies in the manufacturing industry with the benchmark jobs selected in the


Technical Jobs:



$158,306.66 $166,841.58 $203,909.52 $17,724.67 $0


$111,204.94 $113,858.53 $142,214.66 $6,819.06 $0

Engineer 5 $122,549.00 $125,715.54 $161,029.58 $8,958.53 $18,153.33

Engineer 4 $101,514.28 $102,609.26 $131,997.49 $3,915.21 $12,383.00

Engineer 3 $85,438.94 $86,230.13 $112,287.75 $2,041.89 $9,476.92

Engineer 2 $67,534.62 $68,573.19 $93,501.32 $1,691.62 $7,886.67

Engineer 1 $58,150.93 $58,518.68 $80,066.23 $1,029.87 $6,300.00

Technician 4 $43,939.01 $45,275.62 $65,474.86 $2,433.08 $1,260.00

Technician 3 $36,309.07 $37,718.88 $55,725.27 $1,929.48 $1,260.00

Technician 2 $31,693.25 $32,773.59 $48,825.67 $1,308.55 $1,260.00

Technician 1 $26,715.89 $27,647.64 $41,998.51 $1,721.15 $1,260.00



Marketing Manager 3

$149,913.08 $161,848.50 $207,023.20 $19,301.00 $35,165.56

Marketing Manager 2

$128,087.82 $137,032.74 $177,024.51 $11,832.56 $19,944.06


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Marketer 1 $49,431.33 $52,526.80 $78,276.82 $2,668.83 $0

Office Support 6

$48,553.31 $50,037.56 $72,213.09 $1,861.10 $4,760.00

Office Support 4

$42,981.94 $43,502.80 $64,479.25 $1,065.86 $455.00

Office Support 3

$37,040.99 $37,577.49 $55,724.32 $838.89 $980.00

Office Support 2

$32,504.40 $32,899.46 $49,774.98 $506.40 $0

Office Support 1

$28,720.07 $29,016.65 $44,172.85 $1,367.24 $0

After reviewing the data listed above, it’s apparent that the computer software

industry pays more for labor in technical positions than the entire market. On the other

hand, the computer hardware industry pays more for labor in administrative positions

than the rest of the market. In order to ensure that FastCat is able to attract and retain

the best employees in both job families, we chose to use the market data from the

software data for FastCat’s technical jobs and the market data from the computer

hardware industry for FastCat’s administrative jobs.

Adjusting Survey Data to Account for Aging:

Due to the amount of time required to acquire the information for this survey,

the calculated compensation metrics need to be updated to the current date. Since the

average increase in base pay over the last year has been around 3%, we have updated

the survey data by 3% to account for the time lapse. This update will help to ensure

that FastCat’s compensation strategy is still competitive.


technical jobs in the computer software industry and all of the administrative jobs in the

computer hardware industry after the 3% adjustment.

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Technical Jobs:



$176,111.77 $199,189.81 $335,727.59 $43,027.27 $149,049.70


$130,057.23 $140,505.98 $204,481.16 $24,932.57 $74,027.75

Engineer 5 $139,912.83 $147,927.28 $233,417.24 $13,662.69 $75,972.70

Engineer 4 $116,223.17 $121,912.83 $172,202.44 $14,016.36 $55,388.28

Engineer 3 $95,535.87 $99,540.61 $138,777.38 $10,795.30 $34,467.69

Engineer 2 $76,228.19 $79,015.21 $109,909.63 $5,956.30 $24,047.03

Engineer 1 $65,742.21 $67,922.59 $94,531.74 $3,144.40 $9,460.60

Technician 4 $47,528.42 $49,201.33 $71,682.71 $6,429.13 $4,686.18

Technician 3 $41,997.99 $43,291.26 $62,320.02 $5,570.69 $3,475.65

Technician 2 $35,210.46 $36,167.24 $53,403.46 $3,186.41 $2,416.75

Technician 1 $29,598.33 $30,432.60 $48,768.38 $2,099.58 $4,493.21



Marketing Manager 3

$174,399.15 $192,208.15 $256,516.75 $24,092.01 $48,365.65

Marketing Manager 2

$138,669.91 $145,742.06 $211,181.89 $12,381.76 $67,700.00


Marketer 1 $62,272.06 $64,505.62 $84,015.85 $4,076.65 $1,947.50

Office Support 6

$55,239.60 $56,052.90 $76,262.30 $1,070.45 $535.00

Office Support 4

$53,223.51 $54,586.01 $72,782.95 $2,038.53 $2,569.17

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Office Support 3

$44,447.14 $45,073.71 $59,595.75 $1,493.16 $509.55

Office Support 2

$34,156.50 $34,615.61 $48,180.02 $1,025.69 $411.25

Office Support 1

$30,388.43 $30,889.03 $43,229.01 $741.87 $285.00

Comparing Forms of Pay:

Since it is recommended that FastCat use lower base pay and more incentives

and bonuses to all of its employees, we decided to the total cash pay form for the

administrative jobs and for the technical jobs. This would provide more incentives such

as bonuses the highest performing engineers and marketers. These extra incentives

would be awarded based on performance, which would help to ensure that FastCat’s

employees performed the best that they could.

Choice of Metric:

Because of the various sizes of the companies in the computer software and

computer hardware industries, we selected the weighted mean as a metric for our

survey. By using the weighted mean equal weight is given to each employee’s wage,

which would help to provide a more accurate measurement of what an individual

employee is paid in the software industry.

Regression Analysis:

After deciding to use total cash and weighted mean to compare FastCat’s

administrative jobs and technical jobs with the market, a regression analysis was run.

After viewing the results of the regression analysis and seeing that the initial results

were fairly distant from the market line, a choice was made by the Job Evaluation

committee comprised of various subject matter experts to reevaluate the points

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allocated to each job. Then the regression analysis was run again which brought

FastCat’s pay structure much closer to the market. The equation for the regression line

for the technical jobs turned out to be y=754.41x-‐185,148.56, and the equation for the

regression line for the administrative jobs turned out to be y=527.84x-‐89,142.85. The

following graphs show the final regression lines for both the technical jobs and the

administrative jobs at FastCat.

Technical Jobs:

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“Fit” between FastCat and the Market:

In order to understand how well our evaluation of the jobs at FastCat matched up

with the jobs in the external market, we looked at the correlation coefficient, which is

also the R-‐Squared (R2) statistic on from the graphs above. For the technical jobs at

FastCat, the R2 turned out to be 0.907. This indicates that FastCat’s jobs are priced fairly

close to the market rate. Also, the R2 for the administrative jobs turned out to be 0.92,

which is also fairly close to the market rate. By having fairly high correlation coefficient,

it is apparent that FastCat offers pay rates that are pretty close to the rest of the

companies in the markets selected.

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Pay Policy Line

In order to see how the pay level policy that we recommended would compare to the

market, we made two policy lines for both the technical jobs and the administrative jobs and

compared them to the market line.

Since it was recommended that FastCat use a mixed pay-‐level policy, there are

two pay policy lines shown in each of the two graphs below. The green pay policy line

labeled “Policy 1” shows how the pay policy line would look for the less essential jobs at

FastCat, including the office support staff and the technicians, if we lagged the market

by 10%. This line has a slope that is less steep which indicates that there would be less

of a difference in pay as people go up in pay grade. However, we wanted FastCat to be

competitive in attracting the best engineers and marketers, so we constructed a Pay

Policy Line that leads the market by 5%. The blue policy line labeled “Policy 2”

represents this pay policy strategy. As shown in the graph, the slope is steeper which

indicates that there would be a greater difference in pay as people moved up in pay

grade. This would provide a greater incentive for people to try their best and to seek

promotions.

By lagging the market in the less essential technician and office support jobs by

10% and leading the market in the more essential jobs of engineering and marketing

jobs by 5%, FastCat will be able to attract some of the best engineers and marketers in

the labor market. These lag and lead percentages will also be more balanced since

many of the employees in the essential jobs, whose pay policy leads the market by 5%,

are paid more than those in the less essential jobs, whose pay policy lags the market by

10%.

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Technical Jobs:


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Integration of Internal and External Structures After looking at FastCat’s pay for benchmark jobs relative to the external market, we then

considered how we could place the rest of FastCat’s jobs into the pay policy we decided would

work best for FastCat. In order to maximize the flexibility in FastCat’s pay system, we decided to

use bands and zones instead of grades and ranges. Also, since we recommended that FastCat

use a performance driven pay mix policy, we chose not to use flat rates for each job or skill level.

Bands and Zones:

We decided to divide the technical and administrative jobs at FastCat into three major

bands: Support, Professional, and Management. Within the each of the bands, we decided to

use three zones: Beginner, Seasoned, and Senior.

Range Sizes:

Because we decided to use a market-‐based payment structure, we decided to set the

range size between the different bands to 55%. Doing this will also help to provide an incentive

for people to perform better since their performance will largely determine how much they are

compensated.

Minimums and Maximums:

In order to determine the maximums and minimums for each band and zone, we looked

at the Job Evaluation points, which were determined earlier with the help of subject matter

experts in the field. Next, we considered the salaries paid by the bottom quarter in the top

quarter of the companies in the software industry. After considering the statistics and the

strategy that we decided would be best for FastCat, we determined the maximum and minimum

salaries for each of the zones in the three bands. The values within the administrative and

technical jobs are different since the market rates are different between these two job families.

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The following tables and graphs show the results for the administrative jobs and technical jobs at

FastCat.


Band 1: Support Band 2: Professional Band 3: Management

JE Points

Salary JE Points Salary JE Points Salary

Low 200 $20,762.38 333 $57,020.04 463 $77,940.39

Mid 266 $46,138.61 397.5 $126,711.20 481.5 $173,267.50

High 332 $71,514.85 462 $196,402.40 500 $268,564.70

Zone 1: Begin

Zone 2: Season

Zone 3: Pro

Zone 1: Begin

Zone 2: Season

Zone 3: Pro

Zone 1: Begin

Zone 2: Season

Zone 3: Pro

JE Pts.

225 260 300 355 395 440 470 480 490

Low $

21,753 34,780 50,020 91,359 109,000 132,045 150,146 153,735 158,625

Mid $

28,273 42,406 60,374 103,929.5 122,744.5 149,673 166,943 172,906 178,662

High $

34,793 50,032 70,728 116,500 136,489 167,301 183,741 192,077 198,699

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Technical Jobs:

Band 1: Support Band 2: Professional Band 3: Management

JE Points

Salary JE Points Salary JE Points Salary

Low 245 $0 333 $54,210.97 463 $84,153.78

Mid 288.5 $29,250.68 397.5 $120,468.80 481.5 $187,008.40

High 332 $59,963.90 462 $186,726.70 500 $289,863.00

Zone 1: Begin

Zone 2: Season

Zone 3: Pro

Zone 1: Begin

Zone 2: Season

Zone 3: Pro

Zone 1: Begin

Zone 2: Season

Zone 3: Pro

JE Pts.

265 285 310 355 395 440 470 480 490

Low $

6,762 19,780 36,967 68,236 101,176 133,402 147,210 153,176 161,172

Mid $

15,645.5 29,414 46,601 86,964.5 121,904 156,130 177,710 185,676 193,174

High $

24,529 39,048 56,235 105,693 142,632 178,858 208,210 218,176 225,176

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Overlap:

Within both the administrative and technical job fields, there is some overlap among the

bands and zones. This is because we believe that a person who has been within a particular zone

or band for a long period of time should earn more than a person just starting out in a higher

band or zone. Also the wage differentials become greater as a person moves up in rank within

both the administrative and technical fields. This is because as a person moves up in rank, he or

she will be more responsible for how much he or she is paid based on performance. The large

wage differentials at the higher ranks also help to ensure that the marketers and engineers will

perform their best to get the higher pay.

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Evaluation of Decisions

Strategy:

In Phase I of this report, we noted that FastCat should be flexible in the products that they

offer to customers in order to retain its current customers and attract new customers. In order to

do this, FastCat should focus on innovation and responsiveness to its customers’ needs. Further,

we noted that the managers at FastCat should focus on creativity/innovation, team work,

employee morale , and new markets in order to achive a competitive advantage over its

competitors.

In Phase II, we focused on developing a pay system for FastCat which would attract the

best employees in the administrative and technical job markets. We did this by offering a

performance driven pay mix policy and looking at other companies in the computer software

industry for the technical jobs and the computer hardware industry for the administrative jobs.

We also sought to offer higher wage differentials for employees in higher marketing and

engineering postions in order to ensure that they had an incentive to perform to the best of their

abilities. Also, the performance driven pay mix policy would help to reduce the amount of

employees at FastCat who aren’t top performers since they would be unable to be compensated

as much as the top performers. Furthermore, we decided to implement Bands and Zones for

FastCat since we believed that FastCat should be a flexible and flat organization that focused on

teamwork and communication among all employees.

Description of Analysis:

In the process of designing a pay system for FastCat, we first looked at sixty companies in

the computer hardware, computer software, manufacturing, semiconductor, and financial

services markets. By looking at the salary data reports, we gathered information about what

these markets paid their employees in administrative and technical benchmark jobs. Then we

decided that, FastCat should seek the industries that pay their employees the most and base their

market line on those companies. Therefore, we chose to base FastCat’s administrative jobs on

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the companies in the computer hardware industry and its technical jobs on the companies in the

computer software industry. This would allow FastCat to stay competitive and reward its

employees for top-‐notch performance.

We chose to focus on the total cash pay form since it would be easier to offer bonuses as

incentives to marketers for helping FastCat to gain customers and expand its market. This pay

form would also reward the engineers who developed great innovations for FastCat. After

running the regression and looking at the correlation coefficient for the administrative and

technical job families at FastCat, we discovered that there was a strong correlation (greater than

.9) between how FastCat rated their jobs compared to other companies in the computer

hardware and computer software industries. We then chose to lag the market rate for the less

essential jobs at FastCat and lead the market rate for the more essential jobs at FastCat. We

finally decided to assign bands and zones for the jobs at FastCat. We decided that there should

be higher wage differentials for the higher ranking jobs since high performance these jobs help to

determine the life and success of FastCat than the lower ranking jobs. We also chose to overlap

the bands and zones in order to ensure that employees who were high performers in a particular

band or zone would be well compensated for their experience and performance compared to

another employee in a higher band or zone with less experience or lower performance.

Picture of Pay Structure:

After constructing the bands and zones for both the administrative and technical jobs at

FastCat, we compared the JE points of the jobs at FastCat with the JE points of the bands and

zones. We then chose the pay rates based on the proximity of the JE points to FastCat’s jobs to

each band and zone. Our conclusions for the pay rates of the jobs at FastCat are in the following

tables.

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FastCat Job Band Zone Total Cash (Base + Bonus)

Pay Rate

Visionary Champion Management Professional $198,699.00 Client Account Leader

Management Beginner $150,146.00

Software Solutions Consultant Professional Seasoned $109,000.00

Training Assistant Professional Beginner $103,929.50 Marketing Service Rep

Professional Beginner $103,929.50

Marketing Support Professional Beginner $91,359.00 Implementation Consultant

Professional Beginner $91,359.00

Administrative Leader

Support Professional $70,728.00

Clinical Liaison Support Professional $70,728.00

Project Support Assistant



Support Beginner $34,793.00

Travel Coordinator Support Beginner $28,273.00

Administrative Aide Support Beginner $21,753.00

Technical Jobs:

FastCat Job Band Zone Total Cash (Base + Bonus)

Pay Rate

Senior Fellow Management Professional $225,176.00

Project Leader Management Beginner $177,710.00 Software User Interface Architect Professional Professional $156,130.00

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Software Engineer Professional Professional $133,402.00 User Interface Designer

Professional Seasoned $121,904.00

Graphics Designer Professional Seasoned $101,176.00

Programmer Analyst Professional Beginner $86,964.50 Senior Quality Assurance Technician






Technician Support Beginner $24,529.00

Rationale:

While performing the research that went into this report, we kept FastCat’s goals in mind.

FastCat is a relatively new and growing medical software company that is seeking to expand its

market both nationally and internationally and to increase its customer base. Therefore, it is

important that FastCat offer pay rates that are competitive with the top rates in the labor market.

By offering its employees a performance driven pay mix with high incentives and lower base pay,

FastCat can be assured that its employees will seek to perform to the best of their abilities in

order to achieve a higher pay rate.

FastCat Case Final Draft

Documents

Transcript of FastCat Case Final Draft