A compensation program I designed for a theoretical company

1. A ne b g
w e inning

2. Fast Cat Executive Summary
Thec ng stothec m e a n s te y a d s ne to
ha e o p ns tio tra g re e ig d :
 Enc ura einno tio a e a io toinc a ere nue
o g va n nd xp ns n re s ve s
 He s p rt a info e p ye s
lp up o nd rm m lo e
 Inc a ee p ye s ns o c m itm nt
re s m lo e e e f o m e
 Inc a etheva c to e p o thefirma itsp d ts
re s lue us m rs ut n nd ro uc
 Be o einc a ing c m e
cm re s ly o p titivetoo r firm in thes m ind try
the s a e us
 Enha ec to e fo us
nc us m r c
 Re p c a re o nizee o ina e p ye p rfo a e
s e t nd c g xtra rd ry m lo e e rm nc

3. Ma As um tio Theinte l s tureo thefirmc m unic te
in s p n: rna truc f o m a s
w ts
ha killsa va d b thefirma linkingtho ea ilitie tothe
re lue y nd s b s
firm sc nt a futureg a .
’ urre nd o ls

4. Internal Structure
 I re o m nd tha thec m a m inta afle leinte l s tureto
cm e t o p ny a ins xib rna truc
a wthee p ye sro mto p rtic a in s ve l d re p g m a
llo m lo e o a ip te e ra iffe nt ro ra s nd
p je ts To d thisI s g s thre jo fa ilie : Sup o
ro c . o ug e t e b m s p rt/Ad inis tive
m tra ,
Sp c lis , a Ma g m nt.
e ia ts nd na e e
 inte l s tures uld b lo s ly c up d w a e a ria p y.
The rna truc ho e o e o le ith n g lita n a

5. Job Based structure
P cd
ro e ure
 Ma no und rs nd ho the a p id The fo ac m itte isne e s ry to he
ny t e ta w y re a . re re o m e c sa lp
w fa s a und rs nd o thes te y.
ith irne s nd e ta ing f tra g
Sing vs Multi P n fo Eva tio
le . la r lua n
 Eve nes uldb invo din theinte re tio c to e ne d a fe d a k
ryo ho e lve rp ta n us m r e s nd e b c
the fo w ne d littleb rrie tothe ec ns e inte c ns
re re e e a rs s o um r ra tio .
 Ma in afluids tures e p ye sc n w a m ny “ ts b s ha the
inta truc o m lo e a e r a ha ” ut till ve ir
o n s e ia in a a a
w p c lty n re .

6. Alignment
A lo s ly c up d inte l s tureha b e e o g d fo firm tha
o e o le rna truc s e n nc ura e r s t:
 Re uirec ns nt inno tio
q o ta va n
 Re uires rt d s n to m rke c letim s
q ho e ig a t yc e
 Ha a e
s n nviro e tha isinc a ing c m e
nm nt t re s ly o p titive
 Ne d to s rt w rkingin te m
e ta o a s
 Ne d to s rt w m ny ne p je tsa a o e
e s ta ith a w ro c ll t nc
 W ha hig va nc in ho jo sa p rfo e
ill ve h ria e w b re e rm d
All o w h a c nt g a to s c thefutureo Fa t C t
f hic re urre o ls e ure f s a

7. Structure
Thes tureisd s ne to re o nizew t isa d va to Fa t C t :
truc e ig d cg ha d ing lue s a
 Ma g m nt- c a ss te icva a fa ilia w there uire
na e e re te tra g lue nd m r ith q d
p c d sa s
ro e ure nd killsne e s ry to re c p je t g a
c sa a h ro c o ls
 Sp c lty- the“ wm te ls o thec m a The p s e ss
e ia ra a ria ” f o p ny. y o s s killsand
a ilitie to a d va to thec m a b ne d g a ea d c n fo
b s d lue o p ny ut e s uid nc nd ire tio r
s te ica p a n.
tra g p lic tio
 Ad inis tive
m tra /Sup o c ns t m s o s p rt. Do sno a d s te ic
p rt- o is o tly f up o e t d tra g
va b he se ryo s c e .
lue ut lp ve ne uc e d

8. Internal Structure

9. Sample Positions

10. Issues considered
W w nt toc a are uta n a ac ic e p ye In a d n to o e a
e a re te p tio s ho e m lo r. d itio p nly nd
ho s c m unic tingtoo e p ye sw m t a o e ureo p c e a fa
ne tly o m a ur m lo e e us ls ns ur ra tic s re ir.
Thefo w c nc rnsw a a b a is uew n re va tingtheinte l
llo ing o e ill lw ys e n s he -e lua rna
s ture
truc :
 C a
re tingag s c ilinge c w te hno g a s
la s e ffe t ith c lo ic l killsvs inte e o l s
. rp rs na kills
 C a
re tings la g p w g nd rsa (no ino g up .
a ry a s ith e e nd n)m rity ro s
 Currently w m n e rn m retha m n a Fa t C t.
o e a o n e t s a
 Currently No ino g up m m e e rn m retha m rity g up
n-m rity ro e b rs a o n ino ro
mm e .
e b rs

13. Ma As um tio Our g a c n b a hie dif thee p ye s
in s p n: o ls a e c ve m lo e
kno w t ise e te o the a w Thisc n b d new a
w ha xp c d f m nd hy. a e o ith
c ao
le r utlineo c m e a lefa to a ne w thefirm sg a .
f o p ns b c rs lig d ith ’ o ls

14. Management Goals
Enc ura e
o g:
 Op n a ho s c m unic tio to e p ye s
e nd ne t o m a ns m lo e
 Sup o a re a te mw rk
p rt nd w rd a o
 Sup o ris ta rsa inno tiveid a
p rt k ke nd va es
 Sup o e p ye sin a a p c (p rs na a b ine s
p rt m lo e ll s e ts e o l nd us s )
 Sup o c m unic tio a o a h e rtsto c to e (d c rs
p rt o m a ns nd utre c ffo us m rs o to
a p tie )
nd a nts

15. Job Evaluations

16. Sample Job Evaluation Calculation
Total JE
Degree =Weight x points
Compensable Factor Weight
(1-5) Degree = Sum of
W*D
Work Conditions
•What kind of environment will the employee spend most of her time?
•Who/what will the employee be interacting with 75% of the time? 1 200 200 865
•How stressful are these conditions to the employee?
Skill
•What kind of skill level is required for the employee to complete their tasks? 1 150 150
•How much experience/education is needed for the employee to succeed?
•How often will the employee need to update their skill base?
Effort
How much effort is necessary for the employee to successfully go beyond firm goals and enhance
Fast Cat’s competitiveness? 3 80 240
What is the magnitude of the consequences from passive activity to the firm’s strategic goals?
Responsibility
How much responsibility does the position entail?
How many subordinates depend upon the positions responsiveness and support? 1 275 275
What is the magnitude of consequences from irresponsible actions on subordinates and the firm’s
goals?

17. Ma As um tio P y isa oaw y to c m unic tew t thefirm
in s p n: a ls a o m a ha
va sa a tsa am tiva r fo inc a ingp rfo a e
lue nd c s o to r re s e rm nc .

18. Pay Structure
TheEg lita n P y Struc
a ria a tureise o g d fo
nc ura e r:
 Firm tha w nt to fo te te mw rk a thea s p n istha e ua p y
s t a s r a o nd s um tio t q l a
w le d to e p ye s p rt a s tis c n
ill a m lo e up o nd a fa tio
 Allo e p ye sto b re p ns lefo b a e ra eo ta ksa m re
w m lo e e s o ib r ro d r ng f s nd o
fre d mfo ho to a c m lis the *
eo r w co p h m
 It a o ha b e re te to g a r p rfo a ew n c s c lla o tio a
ls s e n la d re te e rm nc he lo e o b ra n nd
s ringo kno le g isre uire . But w s w nt am s a etha
ha f w de q d e till a es g t
o a tio l va sind ua s
rg niza na lue ivid l killsa c ntrib ns
nd o utio .

19. Grades & Ranges
 In a c rd nc w o o o g a to p m tefle ility, w ea fe e
c o a e ith ne f ur o ls ro o xib id nd w r
g d sa s g s d w la e p y ra e .
ra e re ug e te ith rg r a ng s
 It a o he sc m unic tethem s a etha a o o e p ye sa e ua
ls lp o m a es g t ll f ur m lo e re q lly
va d b p c m rejo sin thes m g d .
lue , y la ing o b a e ra e

21. Ma As um tio Fa t C t m t c ntinuetoke p a e o the
in s p n: s a us o e n ye n
e rna m rke in o e toc ntinueto a c to ta nt, he
xte l a t rd r o ttra t p le lp
e o g c nt e p ye sto lo lly m inta p p r
nc ura e urre m lo e ya a in ro e
p rfo a ea re a c m e
e rm nc nd m in o p titivein theind try.
us

22. Competitor Snapshot

23. Market Pay
 Thefo w g p s w thec nt m rke p y fo b nc a d J b
llo ing ra h ho s urre a t a r e hm rke o
Eva tio p ints Thethre b nd a o s g s d Ba sfo J b
lua n o . e a s re ur ug e te nd r o
e lua n p intsa itsto p y w
va tio o nd a ithin them rke
a t.

24. P lic 1 = 3 % a o m rke ra
o y 0 b ve a t te
P lic 2 3 % b lo m rke ra
o y = 0 e w a t te

25. Market Pay
Thefo w g p iss ila to thep vio . It:
llo ing ra h im r re us
 Om o s g s d b nd fo Fa t C t
its ur ug e te a s r s a
 Inc e thera ne J d tap intss g s d fo theFa t C t p s ns
lud s w wE a o ug e te r s a o itio
C ntly Fa t Ca is± 3 % thec nt m rke ra .
urre s t 0 urre a t te

26. P lic 1 = 3 % a o m rke ra
o y 0 b ve a t te
P lic 2 3 % b lo m rke ra
o y = 0 e w a t te

27. Fast Cat Pricing

29. Pay Snapshot of Fast Cat Employees*

31. Scorecard
Re w
vie :
C ntly the a s ve l Is ue tha tro lingFa t C t. So eInc e
urre re re e ra s s t ub s a m lud :
4. De re s re nueg w
c a ing ve ro th
5. Inc a ingLa o C s
re s b r o ts
6. De re s re nued to ne p d ts
c a ing ve ue w ro uc
7. C to e uns tis dw Fa t C t re re e tive a p d ts
us m rs a fie ith s a p s nta s nd ro uc
8. An inc a e ne d fo te m o a o e p ye s
re s d e r a w rk m ng m lo e
Thec ng sto thec m e a n s te y a d s ne to
ha e o p ns tio tra g re e ig d :
• Enc ura einno tio a e a io to inc a ere nue
o g va n nd xp ns n re s ve s
• He s p rt a info e p ye s
lp up o nd rm m lo e
• Inc a ee p ye s ns o c m itm nt
re s m lo e e e f o m e
• Inc a etheva c to e p o thefirma itsp d ts
re s lue us m rs ut n nd ro uc
• Be o einc a ing c m e
cm re s ly o p titiveto o r firm in thes m ind try
the s a e us
• Enha ec to e fo us
nc us m r c
• Re p c a re o nizee o ina e p ye p rfo a e
s e t nd c g xtra rd ry m lo e e rm nc
The fo I ra d Fa t C t a fo w b c us the isro mfo m h im ro m nt.
re re te s a s llo s e a e re o r uc p ve e

33. Considerations
 Thec nt w ig s uld b fre ue
urre e hts ho e q ntly a jus d to re c thec nt Fa t
d te fle t urre s
C t p rfo a ein re tio to o g a . Fo e m le Inno tio c ntly
a e rm nc la n ur o ls r xa p , va n urre
c rrie them s w ig b c us it d c e c theb tto lineo the
a s o t e ht e a e ire tly ffe ts o m f
cma
o p ny.

35. Scorecard
 If thes g s nsa im le e d thefo w s p s p w b the
ug e tio re p m nte , llo ing na ho ill e
futureo Fa t Ca a le d to b tte re ultsa c m a p rfo a e
f s t nd a e r s nd o p ny e rm nc .

37. C a d b C s a raSa s
re te y a s nd ile

38. Appendix 1:
Job and Job number for the “Total Newly Assigned JE Points” Chart.
Management
14 Senior Fellow 6 Green Guru
10 Project Manager 23 User Interface Architect
18 Software User Interface Architect 24 Visionary Champion
16 Software Developer
22 Usability Engineer
4 Client Account Leader
15 Sr Qual Assurance Tech
Specialists
13 Quality Analyst A 17 Software Solutions Consultant
19 Technician 8 Marketing Services Rep
12 Quality Assurance Analyst 9 Marketing Support
5 Graphics Designer 7 Implementation Consultant
20 Training Assistant
Administrative/Support
3 Office Leader 21 Travel Coordinator
1 Admin Aide 11 Project Support Assistant
2 Administrative Assistant II

39. Appendix 2:
Job and employee number for the Fast Cat Charts Created by MS Access.
Management
1,2 Senior Fellow n/a Green Guru
3 Project Manager n/a User Interface Architect
4,5 Software User Interface Architect n/a Visionary Champion
6,7 Software Developer
8,9 Usability Engineer
16, 17 Client Account Leader
10, 11 Sr Qual Assurance Tech
Specialists
12, 13 Quality Analyst A 18, 19 Software Solutions Consultant
14, 15 Technician 20, 21 Marketing Services Rep
n/a Quality Assurance Analyst 22, 23 Marketing Support
n/a Graphics Designer n/a Implementation Consultant
n/a Training Assistant
Administrative/Support
24 Office Leader n/a Travel Coordinator
25 Admin Aide n/a Project Support Assistant
n/a Administrative Assistant II