Reference no: EM132824991

Term Project - HRM 5200 Compensation Management

This term project is designed to simulate the compensation planning process from the development of a compensation strategy to communicating to employees their specific merit increases. There are four sections of the assignment, each with their specific deadlines. Please note that any discussion with respect to employee benefits are out of scope for this assignment. In addition to this assignment description, you will also be provided an excel spreadsheet that contains various employee data including position title, department, and current annual base salary.

Background information.

Light Duty Fabricators (LDF) is a start up company supplying small parts to local manufacturers in the assembly of various products. Their customers are automotive and smaller fabricators of recreational products. Their customers are very aggressive with respect to the cost of their products and place significant pressure on the company to reduce the price of their products. As a result, profit margins are minimal. The operation also recently unionized, and contract negotiations resulted in modest increases slightly above the cost of living posted in the prior year. The company's mission statements are:

Lead in the market in quality and cost of products produced.

Comply with all employee related laws and regulation.

Provide a transparent and open culture.

Provide opportunities for employees to contribute to the problem-solving process and thereby improve productivity.

LDF began operations five (5) years ago with managers hiring non-union individuals from their personal contacts. Each manager had a standard employment contract but was given authority to pay what it took to get the personnel they required. Since start up there has been some increases to pay, but these increases have not necessarily kept up with inflation. The HR function to date has played mostly an administrative role in maintaining employee files and payroll. They were not typically involved in the process of setting compensation rates for new hires. Some employees have been overheard complaining about the fairness and frequency of merit increases.

You have recently been hired as the lead HR manager of the organization and given the directive to review the compensation system and recommend to the owner a merit program that meets the needs the objectives of the company while appearing fair to the non-union employees. The owner of the organization has also given you a total budget of all merit increases of 4.5% of total payroll.

Week 2 - Group structures to be determined.

Week 3 - Pay Model (Chapter 1&2)

Using the pay model describe in Chapter 1 and the strategic concepts discussed in Chapter 2, the team is to develop a compensation model. The first step is to develop a minimum of 2 strategic statements for each four mission statements found above that will be the basis of your group's compensation strategy. A minimum of 8 statements are required. Provide a brief rationale for each of your strategic statements by mapping your statement to the mission of the company and the five Strategic Choices (see slide 26 of Chapter 2 and pages 21-22 of text). Also indicate in your analysis if you are an innovator, cost cutter, and/or customer focused company and provide a rationale for your selection.