OBJECTIVES PHASE ONE STEP ONE: FastCat is a small to medium sized company that provides medical software to healthcare establishments to assist them with the ease of accessing information for the office staff as well as their patients. Since FastCat is competing with much larger companies and the industry is experiencing increased demand due to government regulations they must be aware and fulfill their objectives to ensure success. FastCat must improve the flow of information and data reporting to be certain patients are receiving the correct treatment. The first objective is to improve the care of patients and make sure that doctors and patients have the information they need when they need it. To do this they will need to focus on the patient-physician interface, provide web and mobile services, ensure the ease of communication between physicians and patients, provide privacy to users, and make their systems error free. Supporting this objective is the objective to make sure they keep cost down; not only to help them increase revenue but to make their software affordable to customers. To help increase revenue FastCat will try to shave off or better train customers who are requiring a lot of resources and making the company little to no profit. Implementing training programs for medical staff,physicians, and patients will be important to make sure they know how to properly use the products on their own. This is also related to the company objective of efficiency. FastCat will try to move some of their support and manufacturing offshore in hopes to lower cost, but not quality. FastCat wants to be cautious that lowering cost will never lower quality or efficiency; two things they believe the company is established off of. Keeping cost down for the customers will be extremely important in retaining current customers and acquiring new customers because the demand is increasing. This leads me to another major objective of creating a competitive advantage that is sustainable. FastCat wants to offer their customers customized packages while their competitors only offer standard packages. Right now the demand is at its peak but when everything settles down FastCat hopes to have created an advantage that they can sustain and drive out competitors who entered the industry during the growth. The HITECH Act provides FastCat with an incredible opportunity to grow their customer base and increase profits in a short period of time. In order for FastCat to compete in the health information technology boom, they need to attract many more quality employees to their company. With the $30 billion dollars the government is investing into the HITECH incentive program, Fastcat will be able to spend more on human capital, in order to keep future employees from going to other competing companies. Another staple objective is the goal to grow the company. FastCat wants to acquire new customers as well as retain old ones. They hope to create new features a.

1. OBJECTIVES PHASE ONE STEP ONE:
FastCat is a small to medium sized company that provides
medical software to healthcare establishments to assist them
with the ease of accessing information for the office staff as
well as their patients. Since FastCat is competing with much
larger companies and the industry is experiencing increased
demand due to government regulations they must be aware and
fulfill their objectives to ensure success. FastCat must improve
the flow of information and data reporting to be certain patients
are receiving the correct treatment.
The first objective is to improve the care of patients and make
sure that doctors and patients have the information they need
when they need it. To do this they will need to focus on the
patient-physician interface, provide web and mobile services,
ensure the ease of communication between physicians and
patients, provide privacy to users, and make their systems error
free.
Supporting this objective is the objective to make sure they
keep cost down; not only to help them increase revenue but to
make their software affordable to customers. To help increase
revenue FastCat will try to shave off or better train customers
who are requiring a lot of resources and making the company
little to no profit. Implementing training programs for medical
staff,physicians, and patients will be important to make sure
they know how to properly use the products on their own. This
is also related to the company objective of efficiency. FastCat
will try to move some of their support and manufacturing
offshore in hopes to lower cost, but not quality. FastCat wants
to be cautious that lowering cost will never lower quality or
efficiency; two things they believe the company is established

2. off of.
Keeping cost down for the customers will be extremely
important in retaining current customers and acquiring new
customers because the demand is increasing.
This leads me to another major objective of creating a
competitive advantage that is sustainable. FastCat wants to offer
their customers customized packages while their competitors
only offer standard packages. Right now the demand is at its
peak but when everything settles down FastCat hopes to have
created an advantage that they can sustain and drive out
competitors who entered the industry during the growth.
The HITECH Act provides FastCat with an incredible
opportunity to grow their customer base and increase profits in
a short period of time. In order for FastCat to compete in the
health information technology boom, they need to attract many
more quality employees to their company. With the $30 billion
dollars the government is investing into the HITECH incentive
program, Fastcat will be able to spend more on human capital,
in order to keep future employees from going to other
competing companies.
Another staple objective is the goal to grow the company.
FastCat wants to acquire new customers as well as retain old
ones. They hope to create new features and products, take them
nationwide, and explore international potential. The company
also understands that without the talent of its employees,
growth is not possible. FastCat wants to ensure that they have
enough employees to allow them to take advantage of growth
opportunities. They want to promote from within for upper level
positions hoping this will help them retain talented and quality
employees; another objective of the company. FastCat wants
their employees to not only be satisfied but also engaged in the
company. They know that this will also help support their
objective of sustaining a competitive advantage. In addition to

3. retaining employees FastCat wants to make sure that their
compensation strategy will help differentiate them. They want
to provide employees with a strategy that will attract, retain,
motivate, and comply with company values. They know that in
the upcoming time it will be especially important to retain and
maintain quality software engineers and marketing people.
Although the company wants to fulfill all of their objectives, it
is also extremely important to them that the values of the
company, the environment, employees attitudes, and customer
care is not jeopardized. It is a number one priority when making
a decision to ensure that it is the best thing financially, meets or
exceed customer expectations, and is up to their high quality
standards. In order to be the best medical software available
they must operate efficiently, be consistently reliable, and have
high quality standards.
B.) How detailed/tailored? AND C.) Hierarchical versus
flat?
*Based on Cases in Compensation book
We recommend a tailored structure along with hierarchical. One
of Fastcat’s objectives is for current employees to feel engaged.
One way to do that is by providing clear expectations through
detailed job descriptions that specify the tasks of each job. A
tailored structure would allow for stream lining policies and
procedures in order for all employees to be aligned with the
companies objectives and mission. This also encourages
teamwork among various departments which will create stronger
sense of commitment.
We recommend a hierarchical pay structure because it would
help the company retain talent and create a positive and
collaborative environment. If we have many levels in our
structure employees will feel there is a greater opportunity for
growth within the company and will be able to see clear career

4. paths. This structure will help to identify the difference in the
levels of all jobs. Also, this structure is more transparent for
employees because they will be able to see they are
compensated based in their contribution to the company. This
will be viewed as an equitable process.
PHASE ONE STEP TWO:
· job based structure -
· one structure - means it includes all job families as one and
uses the same plan to evaluate them all
A. DESCRIBE THE PROCESS USED TO DESIGN THE PLAN:
B. SPECIFY WHETHER YOU RECOMMEND A SINGLE
VERSUS MULTIPLE STRUCTURES.
We decided to use a single plan for our internal structure which
will include all job families and use a point based job
evaluation method. Point based evaluations communicate a
common value system and will allow us to evaluate employees
equally which is what this company needs in order to retain
good employees. We want to be as transparent and fair as
possible. This evaluation system also aligns with our
hierarchical structure.
Compensable Factors: reflect how work adds value to the org.
They flow from the work itself and the strategic direction of the
business.
Define it, how were they chosen? How are they scaled? How are
they weighted?
3 CF From Exercise 16:
1. Skills (knowledge, experience, special training)
2. Relationships (with peers, with superiors and subordinates)

5. 3. Responsibility (latitude/scope, for product output, control
exercised over others, for safety of others)
CF selected on own:
4. Complexity of duties (decision making, judgement,
innovation- standardized vs nonstandardized duties)
Bus strategy, work and values
CF #1:
Preparation and Training:
The compensable factor of preparation and training relates to
the minimum level of skills one needs to fulfill a position. It is
assumed that these skills and knowledge are either acquired
through formal school and experience. The software industry is
constantly changing and FastCat must recognize this and be sure
to update the training of their employees in order to help them
stay one step ahead of their competitors. Most of the jobs
require either education or experience and it is really important
that employees have an understanding of the industry to help
the company move forward and innovate new products. FastCat
wants to be able to promote from within and to do this they
must give the employees experience and the proper training in
low level jobs in order for them to progress within the company.
Since most employees are involved with customers they must be
well prepared to answer questions and provide quality service
while resolving the issue. Hiring and firing can be costly to a
company so perhaps instead of firing employees they just need
more training on the task.
they want to have an error free software and they want to hire
within the company. They had hired a lot of employees and the
productivity went down.
CF#2: Contact with others: customer relations, presentations,
helping co workers, interpersonal skills needed for most jobs

6. Contact with others involves meeting with, dealing with, and
influencing other people internally and externally. It is
important that the employees recognize this factor and be held
accountable for it in order to make the company to provide
excellent customer service and have accurate flow of
communication. If all jobs had this responsibility customer
relations would become more personable forming a loyalty from
customers resulting in better reviews, referrals, and high
retention rates. Most of the jobs require teamwork and customer
service. Even for lower level jobs such as entry level
technicians who can be hired with little to no work experience
must possess the quality of strong interpersonal skills. This
could also help improve productivity because communication
would be increased and employees would have a better
understanding of the company and the products.
CF#3: Responsibility/Accountability: to help them feel a strong
sense of commitment to the org.
The compensable factor of responsibility and accountability can
be defined as a way of preventing errors that have a higher
probability of occurring. FastCat is trying to establish a
software that is error free and wants to ensure that their
customers can get any issues resolved immediately upon calling
the company for customer service. Most of the jobs within the
company require the employee holding positions ranging from
low to high level for the work they produce, the service they
provide, and the communication of facts internally. This would
increase productivity because it would provide them with a
sense of importance and motivate them to work with a high
quality standard in mind, one of the most important company
values.
CF#4: Productivity/Results

7. Productivity and results can be related to and defined as the
quality of the output of work and service to customers. We
selected the compensable factor of productivity and results
because FastCat has recently hired more people but yet are less
productive than they have ever been. It is important we know
how to measure productivity or results for each position to
ensure that money is not being wasted on unnecessary positions.
The whole company is working to fulfill the objectives and have
the same goals in mind. The company wants to emphasize the
importance of cutting cost but not quality. Making sure each
employee is productive and producing quality results would
result in not only saving money and creating quality but also
creating a sustainable competitive advantage. FastCat jobs
range from administrative, customer support, marketing,
management, technicians, consultants, and engineers. With so
many different positions it is easy for unproductive workers to
go unnoticed, a problem we hope this compensable factor will
solve.
Compensable Factors:
Preparation and training - 20%
· Skill level - 5%
· education - 5%
· experience - 5%
· goal and standards setting - 5%
Degree
Weight
Total
Skill level

8. Education
Experience
Goal setting
Totals:
contact with others - 30%
· Internal - 5%
· external - 5%
· teamwork/collaboration - 10%
· communication: verbal and written skills - 5%
· conflict resolution 5%
Degree
Weight
Total
Internal
External

9. Teamwork/
Collaboration
Communication: Written/Verbal
Conflict Resolution
Totals:
responsibility and accountability - 30%
· Quality of service/work - 5%
· Number of errors/complaints - 5%
· impact internally/externally - 10%
Degree
Weight
Total
Quality of Service/Work
Number of Errors/Complaints

10. Impact Internally/Externally
Totals:
productivity and results - 20%
· job complexity - 5%
· development skills -5%
· decision making - 10%
Degree
Weight
Total
Job Complexity
Development Skills
Decision Making
Totals:

11. Implementation Plan
Develop recommendations for how your internal structure plan
is to be administered and maintained over time:
In order for the new compensation plan to be implemented and
maintained over time we must properly implement our new
internal structure. We know that by ensuring proper training for
employees and hiring qualified candidates we can improve the
overall quality of the company’s products and services.
Although implementing new training programs can initially cost
money in the beginning, we will be saving money in the long
run. If we can train current employees and create less errors,
this can save us the cost of a lost customer or complaint and
ensure employee knowledge. Having an employee who is
confident and comfortable with the company values and
products will help increase sales and satisfaction levels. In
addition, it is cheaper to invest in the growth of promoting
current employees rather than to hire from external sources. If
we remain invested in our employees and their success we will
profit from higher retention rates.
Ensuring the communication internally and externally, will help
us fulfill the value of outstanding customer service and
productivity. In addition, we will maintain an open environment
that will ensure employee satisfaction and involvement,
encouraging them to share creative ideas or make suggestions
on improvements without fear of punishment. The people
performing crucial roles within the company everyday often
have solutions to things that others do not even know are a
problem. This would only benefit the profitability of the
company and would cost little to nothing to implement, it is
simply a shift of internal culture. This would allow us to spend
money on other areas of the plan that may be more costly.
Responsibility and accountability is one portion of the plan that

12. could increase cost but would benefit the company as a whole.
We want to be a company that pays employees well, allows
them growth, and provides attractive benefits but at the same
time we cannot do that unless we operate effectively. Hiring
new manager or training current ones to identify and manage
this factor could increase our cost but will be necessary. We are
confident that by holding employees accountable and
responsible they will feel a sense of commitment to the
organization, benefiting not only FastCat but our employees as
well.
A recent survey showed that FastCat's productivity was on the
decline even though there was an increase in employees. This
correlates with the results of the “Employee Engagement”
survey in which employees felt there was a lack of commitment
and the organization was not well managed. It is crucial to a
successful organization that they consistently have high
productivity levels outputting quality results. The key to
maintaining a competitive advantage are the people involved in
sustaining high quality and affordable products with superior
customer service behind it. In order to complete this, we have
to be one step ahead of the competition, and part of doing that
is by ensuring that our employees are productive. Quarterly
reviews and clearly assigned tasks and checkpoints will be
necessary along the way. Having a company compiled of
unproductive employees will only discourage others to operate
in the same way. If employees are successful at achieving this
factor, it is only fair that we compensate them to show our
appreciation and respect for their commitment. Increasing
expenses in compensation can only be justified if we can assure
that the company is meeting objectives and values.
Implementing the plan is equally important to maintaining it
over time. With that being known, the whole company will be
involved in the implementation process and must understand
why these changes are being made and how it will benefit them.

13. The plan will be flexible enough to handle new jobs. Employee
training or development programs will be clear. Having the
employees involved in determining the knowledge, skills and
abilities to be learned will help achieve success in the jobs. In
addition, new employees that join the company will need an
understanding of how these decisions were made.
Communicating the plan verbally is important to us because we
want an environment that welcomes employee feedback.
Releasing updates and surveys periodically is also important to
ensuring the plan continues to work and evolves with the
industry. Human resource managers are able to adjust the plan if
employees feel as though it is failing them due to its flexibility.
Employee training or development programs will be done
frequently to keep up with new skills needed or changes being
made. We will also ensure that the training was successful by
gathering feedback from employees and observing how they use
the information. We will ensure managers make decisions
consistent with the plan by providing constant guidance and
training for decisions that are made. We feel that surveys have
proved to be a great tool to ensure the company is on track..
Also, we definitely want to encourage employees to provide
feedback on how to grow the company and how to improve the
work environment.
What about the appeals procedures and legal compliance?
Developing a Complete Compensation System:
A Term Project
PHASE I: Internal Alignment
STEP 1: RECOMMEND COMPENSATON STRATEGIES AND
OBJECTIVES
Read pages 1 - 12 in Cases in Compensation (CIC) to get

14. familiar with this step. Develop a set of objectives that you
will use in later steps to guide your development of a
compensation strategy. Focus your efforts on specifying the
performance, labor cost, attitudes/behaviors, and legal
compliance objectives that FastCat should pursue. Here are two
examples: (1) Generic compensation system objectives are to
attract, retain, and motivate employees. (2) Another set of
objectives is that a compensation system should be Efficient
(performance, quality, customer and stockholder, and cost),
Fair, LegallyCompliant, and Ethical. These come from the pay
model in your textbook.
At this stage, you are looking to link organizational objectives
to HR objectives to compensation objectives. Page 48 in your
text provides a 4-step model on how to do this. Exhibit A
shows another approach. You choose which one best meets
your needs.
NOTE: the terms “objectives” and “strategies” are difficult to
define. In some instances they are the same. In other
situations, they are different. Generally speaking strategies
ought to lead to objectives. But, these terms are relative. For
example, HR objectives may serve a “strategy” for an
organization objective.
Deliverable #1: A written report on objectives for FastCat’s
compensation system. In CIC, page 10, the section on “Your
First Project at FastCat: Recommended Objectives” sets the
stage for this report. Pages 11 to 12 act as a general guideline
for the rest of your report. Your write-up ought to be 1 to 2
written pages (single-spaced, 1 inch margins, minimum font size
of 12). This is due at the same time your internal alignment
report is due.
STEP 2: RECOMMEND AN INTERAL STRUCTURE
I strongly recommend you continuously refer to page 14 in CIC
for an overview of Phase I. (The remaining pages are
sometimes very confusing.) Refer to pp 13-26 in Cases in
Compensation (CIC) for details on completing this step,

15. EXCEPT for the following deviations:
· Do not develop an evaluation system from scratch. Instead,
select three factors from the job evaluation system in “Exercise
16”. (I will explain in class what Exercise 16 is.) You will find
Exercise 16 in the “Term Project” Folder. It constitutes two
PDFs, Exercise 16, part I and Exercise 16, part II. Refer to
pages 470 – 478, showing different compensable factors.
IMPORTANT NOTE: I encourage you to print both PDFs of
Exercise 16. We will refer to many pages in it. If you don’t
print it, you will find it very difficult to stay up with class. An
electron version takes a long time to scroll through pages. It is
unbelievably slow.
· Then add one additional compensable factor of your choice.
This factor should be chosen to capture whatever is uniquely
important about what is needed to perform the most important
jobs at FastCat (in terms of being central to achieving its
objectives and executing its strategy).
You need not change the definitions of the 3 factors you choose
from Exercise 16, nor the definitions of each level. However,
you will need to rescale levels and the weights of the three
factors from the “Exercise”.
· Total number of evaluation points of the four compensable
factors should equal 1000.
· Develop a job-based structure. Do not develop a person-based
structure.
· Use only one structure.
STEP 3: RECOMMEND AN IMPLEMENTATION THE PLAN
Refer to p. 24 in CIC for detailed ideas to include in this step.
Also refer to p. 14 in CIC for a summarized version of this step.
Deliverable (due on final-exam date): A Report on the
Development of an Internal Structure. Your report should

16. include the following general elements:
1. An executive summary (to be placed after your cover sheet)
2. A recommended internal structure (with tables and/or graphs)
3. Recommended implementation plan
4. A manual on how to use the system
5. A summary and rationale
In addition to above, I offer a checklist of items below to
include in Deliverables 1 and 2: Reports for Compensation
Objectives + Internal Structure, respectively. For grading
purposes, I will look for these items (which are merely specific
items in the five elements listed above), and the quality of
them.
· Does the internal structure strategically align with business
(and HR) and compensation objectives?
· Does the report (internal structure) define consistency
decisions?
· Does the report discuss the relationship between resulting
structure and compensation objectives?
· How does the structure help managers?
· How will the structure affect employee behaviors and
attitudes?
· How does the structure affect fair treatment (Compliance)?
· Is the job evaluation adequately linked to the internal

17. structure?
· How well is the developed factor constructed? Defined?
Levels defined and scaled?
· How well are all four factors weighted and rescaled?
· Does the report spell out how the structure will be evaluated
for its effectiveness?
· Does it account for costs?
· Is there a manual included?
Report Dimensions: Limit your executive summary to no more
than a page (single-space, font size of 12, 1 inch margin). Limit
your internal structure report between 4 to 6 typewritten pages
(single-spaced, 1 inch margins, font size of 12). Use up to 3
exhibits. One exhibit should report job evaluation points (total
and for each compensable factor) for each job. Keep in mind
that the most important part of the assignment is to explain how
your recommended internal structure will help FastCat achieve
its objectives. For more ideas, see the sample table of contents
of a previous class below.
SOFT-DUE DATE: Your report for Phase I must be submitted
on 10/7 if you want feedback. I will not accept them after this
date. The report must be better than 50% completed or I will
not review it. I will return it ASAP so you can address my
comments. The final version is due on your final-exam date.
Side Note: The Phase I report will ultimately be integrated with
the Phase II report to form one comprehensive report. (The
integration should be seamless)
For Your Information: Establish internal equity by ensuring
jobs worth more to the organization are paid higher than jobs
worth less. Job evaluation achieves this end by identifying a
hierarchy of jobs. Several job evaluation exists. The job point

18. method is most popular and the one we use in this class. This
approach contains compensable factors with points deemed
important to compensation objectives being achieved. Four
factors are adequate for most applications: Skill/Knowledge;
Responsibility/Accountability; Effort, and Problem Solving.
Obviously, other factors are possible
Developing a Complete Compensation System:
A Term Project
PHASE II: External Competitiveness (Pricing the jobs)
You will need several sources to complete this Phase: CIC,
Belcher Ch11.pdf, Belcher Ch 12.pdf, Exercise 16, and your
Textbook.
STEP 1: RECOMMEND STRATEGY FOR
COMPETITIVENESS
· Skip this step.
STEP 2: DESIGN A SALARY SURVEY
· Identify benchmark jobs. Benchmark jobs are internal jobs
that serve as market anchor points because they closely
resemble job performed in other organization and/or industries.
Additionally, these jobs should: (a) be important in the
organizations’ internal hierarchy; and (b) represent many
organizational levels.
· Identify the labor market. This step constitutes selecting
organizations who compete for similar jobs in the organization
under study. Common criteria include: organizations in the
same industry, size of company, location, and similar positions.
Companies use salary surveys for acquiring salary data to price
benchmark positions. (Note: Not all benchmark jobs have
market equivalents. Make sure to include the highest and
lowest valued benchmark jobs.) Several types of salary surveys

19. exist for this purpose. A salary metric must also be decided.
This is simply an aggregation statistic of salaries collected from
competing organizations. Three common metrics exist:
weighted mean, average, and medium. The compensation
specialist must identify the best metric, with a rationale for his
decision. Moreover, a rationale for identifying the “labor
market” must be stated.
· To determine your labor market, refer to the term project
folder in Black Board. There are several reports with salary
data related to market jobs (or “Jobs Included in the Survey”).
Note: these are text files that can be opened in MS Word. The
documents have salary data for all surveyed jobs. Below is a
list of reports containing these salary data:
· Finance Industry, includes all companies (finance industry.rtf)
· Finance-Small Firms (Finance-small.rtf)
· Hardware Industry, includes all companies (Hardware.rtf)
· Manufacturing Industry, includes all companies
(Manufacturing Industry.rtf)
· Manufacturing-Medium firms (Manufacturing-Medium.rtf)
· Semi-Conductor Industry, includes all companies. (Semi-
Conductor Industry.rtf)
· Software Industry, includes all companies (Software
Industry.rtf)
· Software – Small Firms (software-small.rtf)
· Software- Medium Firms (Software-Medium.rtf)
· Software- Large Firms (software-large.rtf)
· Surveyed job in the market contain two dimensions: Industry
by organizational size. For example, Software industry,
Software-small companies, Software-medium sized companies,
Software-large companies. You must describe which salary
surveys/data serve you best. Include which data you used and a

20. rationale for your decisions.
· NOTE 1: These documents with salary data are analogous to
the salary data on page 496 in Exercise 16, part II (PART C,
Form 12 Salary Survey Data for Six Small Municipalities in the
Northeast United States)
· NOTE 2: Each Word document has multiple pages. You’ll
find it easier to collapse the data and eliminate superfluous
pages.
STEP 3: CHOOSE PAY POLICY LINE
· Refer to p. 56 in CIS and Belcher Ch11.pdf. In this step, you
determine the initial market line as an anchor. (See below on
how to complete this) Next, you decide if you want to change it
to meet your pay policy. Three policies are as follows: Lead the
Market” (Shift the initial market line upward by a factor index);
Lag the Market (Simply leave the initial market line as it is),
and Lead-Lag the Market (Shift the initial market line slightly
upward by a factor index). Note: this decision usually occurs
AFTER you develop the initial market line.
STEP 4: INTEGRATE INTERNAL AND EXTERNAL
STRUCTURES
· Plot benchmark jobs on a scatter diagram. NOTE: You can
skip “Use of Microsoft Access” section. Or, any reference to
the computer program in Phase II. Instead, we will use
Microsoft Excel. We will spend time in class on how to do this.
That said, the Y axis constitutes market salaries. The X axis
represents job evaluation points. Once the positions are plotted,
a market line can be established. This is accomplished with
linear regression. How does this work? Using Excel > Data
Analysis > Data Toolbar > Regression, highlight Y column with
salary data for the benchmark position. Then highlight the job
evaluation points for the same positions. Check “create chart
with trend line”. Decide what other things to include. Press
Enter. You will see a table with regression data and a chart.
Inspect the data. The regression line constitutes the initial
market line. Finally, you must decide on your pay policy-lag,

21. lead, lead-lag. (See Step 3 above. Also refer to Belcher
Ch11.pdf to understand the difference between these
curves/lines.
· Establish salary grades. The number and width of salaries
depend on various policies. A common way to accomplish this
is to locate clusters of jobs. This may constitute a salary grade,
assuming the jobs are the same. Different jobs should be placed
in different grades. For example, an Accountant I and Human
Resource Generalist I, if clustered together, should be placed in
the same salary grade. Conversely, two different positions
closely clustered (e.g., Engineer 1 and Engineer 2) should be
placed in different salary grades. One way to remedy this is to
change the points on one of the jobs. (Don’t worry about
redoing the entire JE points. Just change the overall points). I
recommend using the equal point method (or the cluster
method) to establish salary widths. (See Belcher Ch11.pdf for
details.)
· Determine salary minimum, midpoint, and maximum. For
simplicity, salary grade widths are 100 points. The center is
half way. For example salary one is 0 to 100 points. The salary
half-width-half is 50 point. First we establish the midpoint for
each salary range. (If you use the cluster method, grade widths
may differ from one grade to the next) We plug in the mid-
width figure into the regression formula and determine the
dollar value of the midpoints for any salary grade. Maximums
and minimums are calculated using Exercise 16, page 468.
YOU must decide the salary range. Phase II on page 57, Cases
in Compensation, Exhibit 23 can help you. However, YOU
must provide a justification for your decision. Check R2 for the
degree to which the internal structure mirrors the external
market. An R2 above .85 is a good indicator.
· Slot FastCat non-benchmark jobs (jobs without market
equivalents). When a company position does not have
an external benchmark, you simply slot that job into a salary
grade based on its job evaluation points. For example, a
FastCat job has 460 points. Locate the salary grade whose

22. width (the range of job evaluation points) includes that figure.
Slot the job into that salary grade. There is no single dollar
attached to the slotted position. Instead, it has a range from the
grade maximum to the grade minimum.
· Develop a salary schedule. See page 497 in Exercise 16.
Include all information except % overlap (the last column).
You must include all Fast Cat positions.
STEP 5: EVALUTE YOUR DECISONS
Evaluate the wage structure. All jobs should be placed in a
salary, within the maximum and minimum. If a job resides
outside, you must decide how to handle it. These are known as
Read-Circle Rates (overpaid job or employee) and Read-Circle
Rates (underpaid jobs or employee). Read CIC, p. 67, Step 2:
Assess current salaries. Or, page 247 of “Belcher Ch12.pdf” for
suggestions. As mentioned above, one way to remedy this in
the initial stages of developing the salary structure is to move
jobs up or down to the adjacent salary grade (allocate more or
less points in the evaluation of that job).
STEP 6: DECIDE ON INDIVUAL PAY: Starting Pay, Pay
Increases, and Promotions.
· Decide on how to pay individuals for different reasons.
Decide on starting base salaries. Should a new employee be
paid at the minimum of the salary range, or somewhere above?
Prepare a policy on how you will decide this. Also, state how
pay increases will be decided. These include, but are not
limited to, cost of living adjustment (COLA), merit pay,
seniority, incentive pay, bonus pay, and/or a combination of
these. Make sure to describe how and why you decided this.
Also, explain how promotions will be handled. How will you
decide what to do with jobs that fall outside a salary grade?
Develop a policy for this. Finally, how will you audit/evaluate
that the compensation system is achieving its goals? See
Belcher Chapter 12, CIC for ideas on how to complete this step.
Deliverable: A report describing Phase II in its entirety. This

23. report includes, but is not limited to, the following elements:
· A graphic of the salary structure using MS Excel or another
medium. No matter what method you use to graph your salary
structure, it must look professional.
· A salary schedule. This is a table that includes various salary
information for all jobs at FastCat. Refer to Exercise 16, part II
for an example of this table. (Specifically, page 497, Part C,
form 13, Part I: Salary Structure for Six Eastern Shore Jobs)
· Description and rationale for all important decisions listed
above
· The professional look of the entire report.
· How well are Phase I and Phase II integrated?
· Does the combined report have a table of contents?
· Summary.
STEP 7: FINAL REPORT: INTEGRATING PHASE I AND
PHASE II
This is your final step. I want you to integrate both phases.
Below is a sample of table of contents of a paper from a
previous class. The group produced an outstanding product.
They posed themselves as consultants giving FastCat
recommendations. The group’s name is Association of
Compensation Experts (ACE). This is very clever approach. I
provide this for illustration of a comprehensive report of a
group going above and beyond expectations. Sufficient to say,
the group received a grade of A+
· Report Dimensions: Limit your external structure report
between 4 to 6 typewritten pages (single-spaced, 1 inch
margins, font size of 12). Use up to 3 exhibits. A graphic of
the salary structure using MS Excel or another medium. (No
matter what method you use to graph your salary structure, it

24. must look professional.) Keep in mind that the most important
part of the assignment is to explain how your recommended
external structure integrates with the internal structure. For
more ideas see the sample table of contents below.
FastCat Complete Compensation Plan and Recommendations
Table of Contents
Executive Summary
Our Company
Association of Compensation Experts (ACE)
Compensation Plan 2015
Recommended Strategy and Objectives
Recommended Job-Based Internal Structure
Design of Plan
Pay Structure
Single Structure with Multiple Job Families
Compensable Factors
1. Complexity/Problem Solving
2. Extraordinary Service
3. Knowledge/Experience
4. Supervision Exercised
Point-Based Evaluation Picture

25. Evaluation of Job–Based Structure
Recommended Implementation Plan
Application Plan Manual
Maintenance of Structure
Management of Process and Communication of Issues
Recommended Strategy for External Competitiveness
Best Alternatives for FastCat
Pay Level and Mix of Forms
Integration of Internal and External Structures
ACE Ideas
Select Key Benchmark Jobs
Defining the Labor Market
Complete Table of Pay Grade Strategy
Graphs
Rationale for Phases II Graphs
Appendix A
FastCat’s Compensation Implementation Plan Manual
FINAL DUE DATE: Your final paper must be submitted on the

26. final-exam date. This will be announce later or you can check
online.