Ammeter Inc. is seeking the best way to compensate its employees while maintaining financial viability. There are multiple options to fairly pay employees, including hourly/salary pay combined with team-based incentives and employee stock options. This allows financial flexibility while promoting ownership and family culture among employees. The company should establish a formal compensation plan using market data to ensure competitive pay, and incorporate open communication between employees and management.

1. Shelbi Padgett & Dee Evans
Compensation Systems
in a Small Business
Ammeter Inc.

2. The Challenge
What is the best way for
Ammeter Inc. to properly pay its
employees while also maintaining
their business and using the
resources around them?
➔ There are multiple ways for
Ammeter Inc. can fairly
compensate employees while
also remaining financially viable.

3. Characteristics of a Fair
Compensation System:
-Employee Autonomy
-Fostering of Team “Family” Culture
-Open Communication between Employees
& Management
-Combination of Objective & Subjective Data
What to include:
What to avoid:
-Relying solely on objective or subjective
data
-Unhealthy competition among employees
-Discrimination in pay or benefits
-Hierarchy system

4. How to Address Internal & External Equity
-Use market data to ensure pay is
competitive & establish pay ranges
-Market compensation surveys
-Transparent with pay policies
-Risk management plan

5. Choose an Formal Plan
- Increase feelings of fairness and transparency
among employees.
- Attract, retain and engage employees.
- Mutual interests are aligned
- Supports the mission, strategy and culture.
- Improves employee morale.
➔ An informal plan would result in the lack of
transparency, clarity and you are exposed to
a greater risk of inequity.

6. Base Pay Options
Hourly/Salary Pay vs. Salary Plus Commission Pay

7. Incentive Options
-Behavior Encouragement Plans
-Signing Bonuses
-Spot Bonuses
-Team-Based Incentives
-Gainsharing Plans
-Employee Stock Option Plans

8. Our Recommendation
➔ Hourly/Salary Pay with Team-Based
Incentives and Employee Stock Options
Plans
Pros
- Financial Flexibility
- Ownership by
Employees
- Team and Family
Culture
Cons
- High Performer
Turnover
- No Financial Security
for Employees
➔ Use market data to ensure pay is
competitive
➔ Establish a formal compensation
plan
➔ Offer incentives that promote a
family culture
➔ Incorporate open communication
among employee and managers

9. Questions?