Introduction to Megalithinc.Manufacturer of printingequipments, publisher and suppliersof office equipmentsAfter world war 2, it diversified intopublishingCompany failed to compete IBMand Xerox.John – VP Finance groupFrank – VP HR
Introduction Of HayAssociates Founded at Philadelphia in 1978 Leading company major focuses onmeasuring job contents and providing HRsolutions to businesses. They providing services of issues related to: Strategic compensation Corporate culture Performance planning and its measurement Outplacement
Introduction Of HayAssociates• Approach to solve issues:Understand organizational issuesand their corporate cultureThen develop design to solve it.• They having Data base that hold allmarket and industrial data aboutsalary practices. Helps them to checkexternal equity.
Megalith And HayAssociates Megalith issue: Valuable employees leave organization because ofbureaucratic salary system. They fails to develop good compensation system as theydo not understand how to access employeesperformance and talent. Hay solutions: Measure internal equity based on job contents. Measure External equity After this they will be able to understand each job its roles and accountability level Helps them to differentiate between best performer andaverage performers. Based on job roles they can pay them.
Megalith Finance Group In 1976 Whitefield, decided to focus more on theMegalith Finance group that’s why heappointed John Boyd as senior vice president forFinance Finance Group will be responsible for end resultin area of strategy, planning, policy and control. Boyd had hired 630 employees which werepreviously 350. Due to this huge expansion, he required newpersonnel who could respond to a challenge. They design chart for rating jobs They revised there job description
Continued Boyd hired four key people whichperformed beyond their imagination andexpectations. All four received every possible promotion,salary increase and incentive bonuses. Boyd decided to drop two importantperson just due to not able to providingthem proper benefits. Edmund played a major role in retainingthose competitive people by givingproposal of changing there compensationpolicy.
Expected Outcomes Contribution towards corporate profit andgrowth. Provide timely and accurate information Awareness of financial result to topmanagement Significant contribution to financial groupmanagement continuity and competence. To provide effective management informationservices To provide an effective integrate groupoperations and evalutions.
Lonny and georgeI THINK THAT EXCEPTIONS MUST BE MADE IN THE CASEOF BOTH THE TOP PERFORMING MANAGERS OF THEFIRM.
continuedThe company should pay more to thehigh performing employees who haveset a bechmark for others to followthem into their footsteps.This increase in the pay of both theemployees is directly related to theirperformance rather than their seniorityor high positions within the company.
…………………This can be a source of inspirationand motivation for other employeesto work hard for the wellbeing of thecompany to be rewarded like boththe managers.In this way thecompany performance as well asthe interest of the employees willincrease more when associated witha high pay.
………………. The thing which is of much significance forthe company is retai ing both the key playerslonny and george due to the reason of theircontribution and devotion as well as theirknowledge, skills and abilities enthrustedwithin the company and its other members. Doing so will eventually make the perceptionof the company to be performance orientedin terms of pay rather being dependent onother discriminating factors.
Hay system It is a scheme which is based on the "points factor"approach. It is based on comparative analysis of base salary andbenefits and develop the job description A description of the job is made including such thingsas: expertise required, accountabilities, experiencerequired, functions performed, financial impact of thejob, freedom to decide and act, number of staffsupervised, pre-eminence of the position, influence ofthe position within the company etc. It provides a systematic approach to relative jobcontent measurement
components In the Hay system there is a point scorefor each of "Know How", "ProblemSolving" and "Accountability". Thesefactor points are then used tocalculate a total "points factor" scorefor that job. This task is repeated for alljobs within the company. Compensation is compared on thebasis of job contents rather than jobtitle
1. Knowhow:Knowhow:1. technical and practicalknowledge2. human relation skills basic (courtesy) intermediate (get along well) critical (motivate people)
2. Problem solving:Problem solving:1. thinking environment(strictlyroutine to abstractly defined)2. thinking challenge of thejob(repetitive choice making tocreative concept formation)
3.Accountability:Accountability:1. Position`s freedom to act(totallyprescribed to unconstrained)2. Impact on end result(indirect todirect)3. dollar magnitude of area
Working of hay system inMegalithHay system help by givinginformation and an analysis ofsystem`s strength and weaknessesand their suggestion for changingthe systemTheir numbers data showedMegalith`s current salary practicecompared with the practice ofbroad industrial spectrum
assessmentWe found out that hay system usedthree major factors for the salarydetermination which areknowhow, problem solving andaccountability .they did not useexperience which was veryimportant factor for megalith as theydon’t want to lose their experiencedand capable finance manager
Strengths of Hay SystemUnderstanding of relative accountabilities of all roles –HQ, business, function and category Clarify how matrix structures are (supposed to be) working Establish clear, effective career paths, useful indetermining career moves and development programs Design internally equitable pay structures
Strengths of Hay System(cont’d) Meet requirements of ‘equal value’ legislation Make accurate market competitiveness assessmentsthrough ‘measured job-size’ surveys Analyze job and organization design efficiency andeffectiveness Determine the best job/person match.
Weaknesses• COMPLICATED SCORING MATRIX (TRANSPARENCY).• EMPHASIS ON MANAGEMENT KNOW HOW.• BIAS REFLECTS HIERARCHYAND BUDGET HOLDING.• UNSUITED TO COLLEGIAL AND TEAM-BASED NATURE OFEDUCATION SECTOR..• IS NOT CONCERNED WITH HOW RESPONSIBILITIES ARRIVED AT –SNAPSHOT SYSTEM.• GENDER BIASNESS DISCRIMINATION.• FINANCIAL ISSUES.• ACCOUNTABILITY.• RISK FACTOR.• LACK OF COORDINATION.
Megalith, Inc. – Hay associates (B)TOPIC NO: 7
Introduction• Contain two exhibits• Data based on 57 items• Climate survey• Questionnaires• 48 employee ( 7 top managers , 41 other employees)• Finance group
Exhibit 1SHOWS RESPONSE OF SEVENQUESTIONSRESPONSES HAVE BEEN SCALED ASPERCENTILES
A)To what extent does the current reporting structurefacilitate or hinder implementation of the organizationstrategiesgreatly hinders 1 2 3 4 5 6 7 greatly facilitatesT= 72%G=62%B) to what extent are people in this organization free totake independent actions that are necessary to carry outtheir dutiesto A very great extentto A very little extentT=42%G=38%
C) to what extent are the goals in this organizationtruly challenging?To a very great extentto a very little extentT=22%G=48%D) relative to it competition this organization isA followerA pacesetterT=43%G=65%
E) Considering The Work You Do, How Would YouDescribe You Present Compensation?Very unsatisfactoryVery satisfactoryT=62%G=40%E1) In relation to your performanceT=30%G=50%E2) in relation to others jobs of similar size and knowhow requirement within the organizationT-65%G=60%E3) in relation to comparable jobs in other companiesT=60%G=50%
Exhibit 2CLIMATE PROFILE BASED UPONANSWERS TO ALL 57 QUESTION.EIGHT DIMENSIONS CREATED BYMATHEMATICAL TECHNIQUE CALLEDFACTOR ANALYSIS.
Dimensions• ORGANIZATION CLARITY : STRUCTURES,FUNCTIONAL PATTERNS AND MANAGERIALINTENTION• DECISION MAKING STYLE: TIMELY, RATIONALMANNER, LONG TERM EFFECT• ORGANIZATIONAL INTEGRATION: SUBUNITSCOOPERATE AND COMMUNICATE• MANAGEMENT STYLE: OWN INTUITION, FEEL FREE,SUPPORT FROM HIGHER LEVEL
•PERFORMANCE ORIENTATION : INDIVIDUALACCOUNTABILITY FOR CLEARY DEFINE ENDRESULT , HIGH PERFORMANCE•ORGANIZATION VITALITY: ORG. AS DYNAMICONE, INNOVATION OF ITS DECISIONS ANDRESPONSIVENESS TO CHANGE CONDITIONS•COMPENSATION: SYSTEM IS EQUITABLE, COMPETITIVE, RELATED TO PERFORMANCE