Case Scenario:
Emerald Coast Engineering was set to open its doors in the fall. The building was nearing completion, the grounds were in order, and the advertising for clients was well under way. Emerald Coast's strategy was to provide premium, diversified, engineering skills and experience to focus on long term projects from large clients with whom ongoing relationships could be built. The company was not interested in being a cost leader, but rather was focused on differentiating its product from those offered by its competitors by providing excellent customer service and offering both breadth and depth of skills and experience. However, there were no engineers. It fell to the President of the company and the Chief Financial Officer to recruit the staff of 25 engineers needed to provide the services the company was offering. Although neither of these two administrators had ever been trained to do this, they set out in the characteristic way through advertising in trade journals, various regional and national publications, and the internet. The response to this approach was adequate and interested applicants began to appear. Each prospective employee's resume was examined, and he/she was interviewed by the two administrators and other engineers as they joined. Unfortunately, neither of the two administrators had any knowledge of varying demand in different fields and, in fact, had very little knowledge of fields other than their own, which were project management and accounting respectively.
As each prospect met the rather intuitive criteria of the two administrators, he/she was asked, "What salary do you expect?". In almost all cases the salary requested was granted. In a very few cases, some bargaining took place. The year got off to a smooth start, and the two administrators felt proud of their accomplishment.
All in all things went very well until one engineer got hold of the salaries of all of the engineers at Emerald Coast Engineering.
The administrators were furious with the engineer but were not nearly as upset as the rest of the staff who found major salary discrepancies upon examining the document. They discovered, for example, that engineers with Master's degrees and several years of experience in many cases were making less than people with Bachelor's degrees and almost no experience. They also found that lesser experienced engineers in several cases were making more than their colleagues in the same discipline (electrical vs. mechanical vs. systems engineering).
Finally, a committee was selected from among the engineers to discuss the issue with the two administrators. When the two were confronted with the evidence they could only say, "We gave you what you asked for! We had no knowledge upon which to base our salary decisions but what you told us, and you seemed happy with what you got". To this the committee replied, "We came from various educational backgrounds, various geographical areas with differing salary structures, various types of experiences with the job market and expected you to give all of us a fair shake".
Describe the steps that should have been taken, and must be taken now, to establish:
- Internal Alignment
- External Competitiveness
- Employee Contributions
Describe each step that must be taken in order to first ensure that the job structure is internally aligned, then that the pay structure is externally competitive, and then established a way to reward employee contributions. If I decide to only survey competitors in the local market, I'm suppose to explain why I chose that. Or to reward based on seniority, explain why also. I'm to establish and discuss the link between the organization's strategy and its compensation strategy. To also address the biggest issue that faces the organization at this point. Because the engineers have lost faith in the company's ability to establish a fair pay structure. What can they do to ensure the buy-in of the employees into the newly revised pay structure that you have established? How should the new pay system be communicated to the employees? Who should be involved in the process of establishing the new structure?