Running Head: COMPENSATION 1
COMPENSATION 13
E-Sonic Compensation
Institution
Name
E-Sonic Compensation
Appropriate Pay-Policy Mix
There are several critical factors to be considered in the determination of a right pay policy mix of an organization. Firstly, it is important to consider the company’s performance in business. Secondly, how the other organizations especially, competitors treat and pay their employees is very crucial. This is because it influences the decision-making process when it comes to compensation. This is based on the fact that companies must remain competitive to attract talent. E-sonic should implement an intrinsic compensation. Such a compensation focuses on intrinsic rewards. Rewards reflect employee mindset as a result of performing their jobs. This is achieved through effective job design, fostering supportive and engaging work environments and demonstrating respect for employees. These ways managers can promote and intrinsic pay mix policy. In the case of E-Sonic, the company has used their marketing and distribution departments significantly efficient as evidenced by the exorbitant production levels that the company boasts. This means that employees should be well compensated (Mattson, 2008). This pay mix will also ensure that the highly skilled artists are effectively utilized to market the company brands. Concerning the finances and stability of the company, it is arguable that it has a positive retention rate that binds the artists for the long run. This is a good representative of maximum production for the future.
Pay-Policy Level Decisions
The company’s sales and marketing, as well as development departments, are provided with incentives as their company positions contribute to the success of the organization. However, administrative positions will maintain a higher pay rate. In fact, this is normal for the top administration positions in any organization. In this case, the least paid will be the artists. It is notable that developing artists cannot content with themselves, but still the company has been able to maintain maximum production. This implies that with time, they will be on the recipient end of a higher pay rate for their endeavors and loyalty to the organization (Brickley et al., 2017). This role of the company’s strategic initiative does not warrant extra funds to attract experienced artists. In fact, it is arguable that the company does not require professionals with higher pay demands. With a 5.00% 7.00% Base Wages 5.00% STI 2.00% LTI 5.00% 76.00% Discretionary Benefits Required Benefits Paid Leave; the job structure will maintain an 8% pay rate increase. This means that E-sonic will want to entice the best in sales and marketing departments and keep them within the organization once employed through regular pay rises to keep up with competition for talented marketing and sales personnel (Brickley et al., 2017).
Compensation Survey
1. Choose competitors based on indus ...
1. Running Head: COMPENSATION 1
COMPENSATION 13
E-Sonic Compensation
Institution
Name
E-Sonic Compensation
Appropriate Pay-Policy Mix
There are several critical factors to be considered in the
determination of a right pay policy mix of an organization.
Firstly, it is important to consider the company’s performance
in business. Secondly, how the other organizations especially,
competitors treat and pay their employees is very crucial. This
is because it influences the decision-making process when it
2. comes to compensation. This is based on the fact that companies
must remain competitive to attract talent. E-sonic should
implement an intrinsic compensation. Such a compensation
focuses on intrinsic rewards. Rewards reflect employee mindset
as a result of performing their jobs. This is achieved through
effective job design, fostering supportive and engaging work
environments and demonstrating respect for employees. These
ways managers can promote and intrinsic pay mix policy. In the
case of E-Sonic, the company has used their marketing and
distribution departments significantly efficient as evidenced by
the exorbitant production levels that the company boasts. This
means that employees should be well compensated (Mattson,
2008). This pay mix will also ensure that the highly skilled
artists are effectively utilized to market the company brands.
Concerning the finances and stability of the company, it is
arguable that it has a positive retention rate that binds the
artists for the long run. This is a good representative of
maximum production for the future.
Pay-Policy Level Decisions
The company’s sales and marketing, as well as
development departments, are provided with incentives as their
company positions contribute to the success of the organization.
However, administrative positions will maintain a higher pay
rate. In fact, this is normal for the top administration positions
in any organization. In this case, the least paid will be the
artists. It is notable that developing artists cannot content with
themselves, but still the company has been able to maintain
maximum production. This implies that with time, they will be
on the recipient end of a higher pay rate for their endeavors and
loyalty to the organization (Brickley et al., 2017). This role of
the company’s strategic initiative does not warrant extra funds
to attract experienced artists. In fact, it is arguable that the
company does not require professionals with higher pay
demands. With a 5.00% 7.00% Base Wages 5.00% STI 2.00%
LTI 5.00% 76.00% Discretionary Benefits Required Benefits
Paid Leave; the job structure will maintain an 8% pay rate
3. increase. This means that E-sonic will want to entice the best in
sales and marketing departments and keep them within the
organization once employed through regular pay rises to keep
up with competition for talented marketing and sales personnel
(Brickley et al., 2017).
Compensation Survey
1. Choose competitors based on industry, size, and union status.
It is clear that E-sonic is not among the top-ranked companies
when it comes to compensation for their workers. This also
means that the industry where E-Sonic operates is highly
competitive. In fact, the competitors grow on a daily basis. Such
competition includes companies such as Warner Bros,Cash
Money Billionaire, Aftermath Shady Records and Def Jam
among others. These competitors offer more comprehensive and
attractive compensation to their employees. The company
produces good music as part of their strategy to secure a
position at the top of the competition. However, compensation
practices help organizations attract talent which is integral to
securing that top position. Retention and attracting skilled
employees and artists represent an increase in productivity and
efficiency. This analysis shows that E-sonic has a lot to learn
from the competition that has impacted the change in
mainstream music perceptions (Barcelona & Martocchio, 2017).
Similarly, the choice of competitors based on industry size and
union aspects reveals that E-sonic which is not unionized chose
competitors to compare with from non-unionized categories.
This does not provide a comprehensive approach to compare the
industry dynamics and compensation influences. It is critical to
note that without the collective bargaining feature provided for
by unions, E-sonic does not have to worry about negotiations
for higher pay rates. The company’s focus should be to compete
with non-unionized companies (Barcelona & Martocchio, 2017).
2. Select benchmark jobs for each structure using benchmark
job descriptions.
E-sonic positions were evaluated against select trademark
positions. These positions were selected based on job
4. responsibility similarities, academic qualifications, and
experience. The compensation survey was done based on these
select positions.
E- Sonic Position
Selected Benchmark Position
Marketing Director
Marketing 4
Artist relationship Manager
Business Development I
Creative Director
Marketing III
Copy Writer
Marketing II
Director of Software Development
Software Development V
Software Project Manager
Software Development IV
Software Engineer
Software Development III
Software testing Specialist
Software Development I
Director of Market Analysis
Analyst III
3. Reconcile differences between benchmark jobs and E-Sonic
positions
Considering that similar jobs may have different degrees of
compensation, the following comparison sheet was used to
account for the differences;
Skill
Adj Pay
My (employee’s) job requires substantially more skill than the
benchmark job
5. X
+4%
My (employee’s) job requires somewhat more skill than the
benchmark
+2%
My (employee’s) job and benchmark job require equal skill
0%
My (employee’s) job requires somewhat less skill than the
benchmark job
-2%
My (employee’s) job requires substantially less skill than the
benchmark job
-4%
Effort
My (employee’s) job requires substantially more effort than the
benchmark job
X
+4%
My (employee’s) job requires somewhat more effort than the
benchmark
+2%
My (employee’s) job and benchmark job require equal effort
0%
My (employee’s) job requires somewhat less effort than the
benchmark job
6. -2%
My (employee’s) job requires substantially less effort than the
benchmark job
-4%
Responsibility
My (employee’s) job requires substantially more responsibility
than the benchmark job
X
+4%
My (employee’s) job requires somewhat more responsibility
than the benchmark
+2%
My (employee’s) job and benchmark job require equal
responsibility
0%
My (employee’s) job requires somewhat less responsibility then
the benchmark job
-2%
My (employee’s) job requires substantially less responsibility
then the benchmark job
-4%
4. Update salary data for inflation using CPI-U.
After a comprehensive compensation analysis ran using
Microsoft Excel, as represented by the screenshot below, the
data was tabulated in tables for efficiency.
The results of the CPI-U are tabulated below;
Performance Appraisal
15. 0.84
Regression equation
y = 85x + 7226.67
These results are indicative that 84% of the variation in salary
explained through the regression equation. According to this
line equation, the estimated compensation for the Marketing
Director is $114,947 (based off of a 1200 job evaluation point).
The Creative Director compensation is estimated to be $70,850
(based off of 800 job evaluation points). Lastly, the
CopyWriter position salary is predicted to be $57,881 (based off
of 700 job evaluation points).
The following chart summarizes the regression analysis for
each job;
Position
Job Evaluation Points
Annual Salary
Administrative Assistant
775
$28k
Administrative Assistant
775
$32k
Administrative Assistant
775
$34k
Administrative Assistant
775
$26k
Administrative Assistant
775
$31k
Administrative Assistant
775
$35k
Administrative Assistant
16. 775
$33k
Administrative Assistant
755
$31k
Executive Assistant
1250
$36k
Executive Assistant
1250
$39k
Pay Grades and Ranges
The pay grades and ranges were based off the qualifications
skills and abilities for a given job structure along with
compAnalysis as a guide (Sangwan, 2015). The following charts
show the outcomes of eight various levels with overlaps in
salaries between grades.
Grade
Minimum
Medium
Maximum
1
35,114.03
39,982.59
45,209.70
2
43,204.23
47,831.81
53,502.62
3
51,238.26
56,448.30
62,049.06
4
17. 55,486.96
64,876.31
73,600.02
5
65,624.28
76,984.70
89,340.05
6
80,336.29
96,991.60
115,574.82
7
85,321.20
104,109.78
126,010.66
8
110,346.05
135,890.45
157,236.13
Evaluate and summarize decisions made for each job structure
In conclusion, the company should conduct a survey of salaries
across markets requiring similar jobs. This is critical in
determining optimal levels of compensation that are competitive
and at the same level with competitors in the industry and labor
market counterparts (Sangwan, 2015).This survey would make it
possible to establish fair pay grades and ranges that align with
internal equity. Such a mechanism would also be crucial in
attracting top talent over competitors into jobs that determine
the external competitiveness of E-Sonic.
References
Barcelona, D. & Martocchio, J. J. (2017). Building Strategic
18. Compensation Systems Project: Strategic Compensation: A
Human Resource Management Approach, 8th Edition.
Brickley, J., Smith, C., & Zimmerman, J. (2017). Managerial
Economics and Organizational Architecture (6th ed.). New
York: McGraw Hill/Irwin.
Mattson, R. (2008). Managing the challenges of global
compensation. Employment Relations Today, 35(2), 51-57.
Sangwan, S. (2015). Impact of compensation management
practices on employee’s performance in private sector banks.
Market Pay Graph
0
20000
40000
60000
80000
100000
120000
140000
160000
0200400600800100012001400
Job Evaluation Points
Salary
Annual Salary
Predicted Annual Salary
Market Pay Line
Pay Grades and Ranges
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
19. 200000
Grade/Range
1
Grade/Range
2
Grade/Range
3
Grade/Range
4
Grade/Range
5
Annual Salary
`
The current state of globalization has resulted in a high level of
connectivity between the economies of various parts of the
world. U.S. employers will increasingly conduct business with
entities in a variety of other countries as former underdeveloped
parts of the world experience tremendous economic, trade, and
standard-of-living growth. In addition, the move from
traditional manufacturing to knowledge- and service-based
employment also means that jobs as well as markets are more
likely to be dispersed geographically. As the need for employers
to interact globally increases, HR management professionals are
going to have increased opportunities to develop compensation
and benefits programs for U.S. employees in foreign
assignments, as well as for local employees in foreign offices of
the parent company.
It is essential that compensation professionals know the basic
legal employment context and the minimum statutory
employment standards of the country where they propose to do
business. After that, compensation professionals may consider
the norms for competitive pay and benefits needed to attract the
desired talent.
In this module, we will provide a glimpse of the wide variation
in compensation and benefits practices across several regions of
20. the world. We will review governmental structure, norms, and
historical events that help shed light on pay and benefits. For
each country, we will examine statutory minimum wage rates.
Next, we will consider such basic benefits issues as paid time
off, protection programs (including retirement and health care),
and stand-out benefits in particular regions. We will note where
such protection programs as retirement and health care are
required by the government or offered at the discretion of the
employer. It is important to note that many other governments
do not regularly assess pay levels in their economies, which
stands in stark contrast to the wealth of data provided regularly
on U.S. markets by the U.S. Bureau of Labor Statistics. The
U.S. Bureau of Labor Statistics regularly compares the hourly
compensation costs in several countries (U.S. Department of
Labor, Bureau of Labor Statistics, 2010; International Labour
Organization, 2013).
References
International Labour Organization. (2013). ILO database on
conditions of work and employment laws. Retrieved from
http://ilo.org/dyn/travail
Martocchio, J. L. (2015). Strategic compensation: A human
resource management approach (8th ed.). Upper Saddle River,
NJ: Prentice Hall.
U.S. Department of Labor, Bureau of Labor Statistics. (2010).
USDL: 10-1173. Retrieved from www.bls.gov
International Labour Review, Vol. 147 (2008), No. 1
Fixing minimum wage levels
in developing countries:
Common failures and remedies
21. Catherine SAGET*
Abstract. Some developing countries have set their minimum
wages too high or
too low to constitute a meaningful constraint on employers. The
article compares
minimum wages worldwide, proposes several ways of measuring
them in develop-
ing countries and discusses whether they are effective
thresholds in those countries.
The second part of the article considers the institutional factors
leading countries to
set minimum wages at extreme levels. The author concludes that
the minimum
wage is used as a policy instrument to several ends - wage
negotiation, deflation
and social dialogue - which results in the absence of a wage
floor, weak collective
bargaining, or non-compliance.
In the political economy of minimum wage setting, the debate
about mini-mum wages among mainstream labour economists
typically opposes two
points of view. The first is that a judiciously set minimum wage
can make a
modest contribution to meeting social goals, without much
distortion of
employment patterns; and the second, that the best policy is to
leave wage set-
ting entirely to supply and demand (and, maybe, to collective
bargaining),
without any recourse to legislation or other regulatory measures
to establish a
minimum wage. This article will not engage in that debate (as it
would require
at least a book!): it adopts the former view (Saget, 2001).
23. presents a compre-
hensive overview of minimum wage levels worldwide. It shows
that in a
sizeable number of countries, the minimum wage is so low in
the wage struc-
ture that it is not, or hardly, a constraint for enterprises ("mini
minimum
wage"). These countries are mainly located in the former Soviet
Union, Africa
and, to a lesser extent, Latin America. The article also shows
that the situation
is quite the opposite in other countries located in Asia, and also
Latin America
and Africa, where the minimum wage appears to be very high in
the wage dis-
tribution. In these countries, the article argues, the minimum
wage is in fact too
high to be considered as a genuine minimum wage. This
situation is labelled
"maxi minimum wage".i Finally, in the intermediate group of
countries, the
minimum wage is set at levels, which, although they may differ
greatly from
one country to another, seem to correspond more closely to the
definition of
minimum wage.
The article shows, on the one hand, that in many countries there
is a link
between the minimum wage and the level of public-sector
wages, pensions and
social benefits. It also documents how price stabilization
policies have relied on
the minimum wage. All of these factors are explored to explain
"mini mini-
mum wage" situations. The article also shows, on the other
24. hand, that in some
countries, minimum wage legislation amounts to average wage
fixation. It also
shows that poorly developed collective bargaining is a driving
factor behind
the emergence of "maxi minimum wages": if minimum wage
consultations are
the only forum where trade unions can make their demands
known, there is a
danger that the resulting minimum wage is not a genuine
threshold, but rather
the actual wage earned by most formal workers.
Thus, the article demonstrates that countries are trying to
pursue multiple
goals with a single policy instrument. Governments have used
the minimum
wage as a reference to fix wages and incomes, as a deflator tool
and as a means
of promoting social dialogue. The result has been trouble. As is
known from
macroeconomic policy, it is desirable to have as many policy
instruments as pol-
icy goals.
The problems and dangers deriving from what tends to be a
"maxi mini-
mum wage" situation - notably, the effect of a high minimum
wage on employ-
ment and non-compliance - have received a lot of attention in
the literature.
"Mini minimum wage" situations also create failures - and not
only for workers.
They will be illustrated as well.
' This situation is sometimes referred to as "maximum wage" in
25. the literature, an expres-
sion which, though it has the advantage of being catchy, can
lead to some confusion. What it refers
to here are the wages earned by blue-collar workers which, even
if very high, do not belong to the
top-wages structure, as the expression "maximum wage" could
suggest.
Fixing minimum wage ieveis In developing countries 27
Finally, the article will review some of the solutions applied to
fix the
minimum wage at a more appropriate and meaningful level,
sometimes with a
measure of success.
The article is structured as follows. The first section presents
minimum
wage levels in the world and compares them with various
estimates of average
wages and labour productivity. It also discusses whether the
minimum wage is
actually economically binding in these countries, that is,
whether it really con-
stitutes a wages floor on the labour market. The next section
suggests institu-
tional explanations of the two extreme, though common,
situations of "mini
minimum wage" and "maxi minimum wage". The third section
discusses prob-
lems created by these situations, then presents a couple of
innovative solutions.
The article concludes on the role and weaknesses of such a key
institution in
26. developing countries.
With what indicators should the minimum wage be
compared?
In order to establish the level of a minimum wage, it is
compared with three dif-
ferent estimators of wages and productivity: GDP per capita,
GDP per worker
and average wage. Box 1 summarizes the advantages and
disadvantages of each
of the three estimators. As a first indication of the ranking of
minimum wages,
rates were compared with a broad indicator of income, namely,
GDP per capita
in purchasing power parity (PPP) dollars (table 1). Countries
are classified as
being in a situation of "mini minimum wage" if their ratio of
minimum wage to
GDP per capita is less than 0.30, and as being in a situation of
"maxi minimum
wage" if their ratio is above 0.60. These two figures are used as
cut-off points, in
an arbitrary way, based on the distribution of ratios of the
minimum wage to
GDP per capita.
One of the striking characteristics emerging from table 1 is the
number of
developing countries where the ratio of minimum wage to GDP
per capita is as
low as between 0.15 and 0.30. This group includes several
exporters of mineral
resources, such as oil, which are highly valued on the world
market. As a result,
their average GDP per capita is high. However, capital-
intensive sectors, often
27. isolated and employing few workers, are not representative of
the whole econ-
omy. This feature might be partly responsible for the very low
ratio of minimum
wage to GDP per capita.
As can be seen from the second and third columns of table 1,
about half
of the variation in the ratio stems from variation in GDP per
capita across
countries, rather than from variation in the minimum wage.
Hence it is import-
ant to understand how GDP is measured. In fact, one big
problem with com-
paring the minimum wage to GDP, whether per capita or per
worker, hes in
the underestimation of GDP in some transition countries. Saget
(2000) shows
that, in some transition countries, GDP estimates may be even
less reUable
than employment data. There may be a similar issue in
developing countries
generally. Marinakis and Velasco (2005) argue that one of the
reasons for the
28 International Labour Review
Box 1 . With what indicators should the minimum wage be
compared?
1. The minimum wage
Minimum wage levels come from the ILO database on
Conditions of Work and
28. Employment Laws, which is available at
www.ilo.org/travdatabase for more than
100 countries. In countries where the minimum wage is fixed
through collective bar-
gaining, the level for the leading sector has been reported. In
cases where there are
multiple rates of minimum wages across regions, sectors and/or
occupations, the
minimum and the maximum levels for an adult unskilled worker
are considered. For
the purposes of this article, the average of these two levels is
used. For countries not
mentioned In the database, information on minimum wage
levels was obtained from
the United States Department of Labor. All minimum wage rates
are in PPP dollars.
The reference year is between 2002 and 2004. In order to make
the comparison more
meaningful, standardized monthly minimum wages were
calculated on the basis of
40 hours of work per week. Legal maximum hours of work from
the ILO database
were used for this purpose (also see McCann, 2005, Annex I).
2. GDP per capita - = (Z wages + ï profits)/(2 workers +1 non-
workers)
GDP is a measure of the total flows of goods and services
produced by the
economy over one year. By a principle of national accounts,
GDP at factors cost is
equal to the value of incomes paid to the factors of production
(wages + profits).
"Factors cost" simply means that indirect taxes are deducted.
However, what is
usually available is GDP estimated at purchaser price without
29. deducting indirect
taxes.
The advantages of comparing the minimum wage with GDP per
capita include
availability of the latter for almost all countries. The main
shortcomings arise from
cross-country variations in the numbers of dependants. A
second problem occurs
because of differences in the percentage of profits in GDP
across countries. Another
significant problem is that GDP estimates can be quite distorted
in countries with a
high level of informality and/or with a small, isolated capital-
intensive sector.
3. GDP per worker.- = (£ wages + £ profits)/(2: workers)
GDP per worker is a much better indicator of labour
productivity than GDP per
capita. However, figures on the number of workers are not
always available and the
quality of employment data can be a problem. Similar issues
arise with varying profit
shares across countries (and across time), underestimation of
the size of the informal
economy, and non-deduction of indirect taxes.
4. The average wage - = (£ wages)/(£ workers)
In principle, comparing the minimum wage with the average
wage gives a bet-
ter indication of its rank in the wage distribution. The problems
here are threefold.
First, wage data are either unavailable or of poor quality.
Second, the wages used to
30. compute the average wage may not correspond to the sectors or
geographical zones
used to compute the minimum wage. For example, minimum
wage legislation may
not cover domestic, agricultural and young workers. Yet wages
from these categories
of worker are used to compute the average wage. As a result,
the ratio is not mean-
ingful. Third, the average is not a good indicator of the wage
distribution in high-
inequality countries. In this respect, the median would be a
better indicator, but the
data available were insufficient to calculate it.
Fixing minimum wage levels in developing countries 29
Table 1. Standardized minimum wages and GDP per capita (PPP
doiiars,
2002/2004).
Countries with a "mini minimum wage" are given in itailcs;
those with a "maxi minimum wage", in boid.
Country
Albania
Algeria
Angoia
Argentina
Armenia
Australia
Austria
Azerbaijan
Bangiadesh
Barbados
31. Belarus
Beigium
Benin
Bolivia
Bosnia and Herzegovina
Botswana
Brazii
Buigaria
Burkina Faso
Burundi
Cambodia
Cameroon
Canada
Central African Republic
Chad
Chile
China
Colombia
Congo, Democratic Republic
Costa Rica
Côte d'Ivoire
Croatia
Czech Repubiic
Denmark
Djibouti
Dominica
Dominican Repubiic
Ecuador
Monthly minimum wages
195.27
389.41
65.63
443.17
47. 0.09
2.02
0.41
1.08
(continued overleaf)
32 International Labour Review
Table 1. Standardized minimum wages and GDP per capita (PPP
doilars,
2002/2004) (concl.)
Country
Trinidad and Tobago
Tunisia
Turkey
Uganda
Ukraine
United Kingdonn
United States
Uruguay
Uzbekistan
Venezuela, Bolivian Republio
Viet Nam
Zambia
Monthly minimum wages
283.72
362.79
590.93
49. 0.45
0.55
0.29
0.16
0.17
0.50
0.74
0.47
Source: Minimum wage in PPP doilars: ILO Database on
Conditions of Work and Empioyment Laws and United
States Department ot Labor. Monthly minimum wage rates have
been standardized on the basis ot 40 hours of
work a week, using information on legal maximum hours of
work. GDP per capita at purchaser price in 2003
were taken from the World Development Indicators (Worid
Bank). In the third column, "ratio" is the ratio of the
standardized monthly minimum wage to GDP per capita per
month.
high value of the minimum wage with respect to GDP per
worker in Paraguay
lies precisely in the underestimation of GDP (see table 2).
The comparison of standardized monthly minimum wage in PPP
dollars
with GDP per worker is reported in table 2 for a sample of
countries. The first
conclusion to be drawn is that, owing to the poor quality of
employment data
generally, comparing the minimum wage with GDP per worker
instead of
GDP per capita may not be the best option. The sizeable
difference in the ratio
between the two tables readily leads one to this conclusion. It is
to be expected
50. that the ratio of the minimum wage to GDP per capita should be
higher than
that of minimum wage to GDP per worker - and it is indeed so.
While in most
cases, the former ratio is more or less three times the latter, the
increase is
much more modest for Ukraine, and even more so for China (a
77 per cent
increase). It is hard to believe that this solely reflects
differences in the depend-
ency rate across countries.2 As GDP is calculated in the same
way in tables 1
and 2, this result casts serious doubt on the validity of the
employment data
used. The source of the problem lies in the mis-measurement
and treatment of
seasonal workers, informal workers and workers in small firms,
particularly in
the service sector.
To conclude this section, table 3 compares minimum wage
levels with aver-
age wages. In principle, this comparison makes more sense, as it
provides infor-
2'- The difference between the ratios of GDP per capita and
GDP per worker can largely be
explained by the value of the dependency rate, which is the
ratio of the economically inactive to
the economically active (workers).
88.50
50.90
164.40
52. Table 2. Monthly nninimum wages and GDP per v/orker in
selected countries
(PPP dollars, 2003/2004)
Country Minimum wage GDP per worker per month Ratio
Armenia
Azerbaijan
Botswana
China
Kazakhstan
Kyrgyzstan
Mauritius
Mexico
Paraguay
Ukraine
Sources: GDP at purchaser price: International Monetary Fund,
World Economic Outlook Database, September
2005 (GDP is in biliions of PPP dollars); Employment: ILO
Laborsta, latest available year; Minimum wage in PPP
dollars: ILO Database on Conditions of Work and Employment
Laws, monfhiy standardized on the basis of
40 hours of work a week.
mation on the location of the minimum wage in the wage
distribution. Yet there
are shortcomings here too. First, the average wage, which is
very sensitive to
extreme values, is not a good indicator of the wage distribution
in high-inequality
countries (see box 1). Second, available data on wages are
generally restricted to
formal wages or to wages in the manufacturing sector, while
what are needed are
data on all wages. Another major issue is that few countries
53. release recent and
reliable wage data. Finally, the minimum wage may not be
applied in certain sec-
tors or geographical zones that are nevertheless used to compute
the average
wage. For example, agricultural workers are excluded from
minimum wage pro-
tection in Botswana, but wages from agriculture are included in
the computation
of the average wage. In Paraguay, agricultural workers,
domestic workers and
apprentices earn less than the standard minimum wage used in
the three tables,
which then calls into question the significance of the ratio of
the minimum to the
average wage in this case.
The fact remains that some countries show extreme values of
the mini-
mum wage whatever the estimator of wages and productivity
used for compari-
son purposes. In addition, the estimators used - GDP per capita,
or per
worker, and average wages - all have shortcomings and one has
to be careful
before drawing hasty conclusions based merely on ratios. This
is, however, the
case of the World Bank's "Doing Business" database, which
establishes a rank-
ing of countries based on the ratio of their minimum wage to
value added per
worker. 3
5 The Doing Business database assigns 1 to countries where the
ratio of the minimum wage
to average value added per worker is higher than 0.75; 0.67 for
54. a ratio between 0.5 and 0.75; 0.33
between 0.25 and 0.50; and 0 for a ratio less than 0.25.
Minimum wage regulations represent one
of several labour laws that are measured across countries and
assigned numbers. These numbers
are then averaged. Countries with a high average have the most
"rigid" employment regulations.
13 000.00
60 000.00
417.60
412.50
456 560.00
2 964.00
950.00
813 471.00
6 837.00
903.00
3 870.00
205.00
1 242.00
56. 0.79
0.24
0.99
0.94
0.35
0.66
0.71
0.21
34 International Labour Review
Table 3. Wages and minimum wages in selected countries
(monthly levels in local
currency, 2002/2004)
Country Minimum wages Average wages Ratio
Armenia
Azerbaijan
Botswana
China
Indonesia
Mauritius
Mexico
Paraguay
Philippines
South Africa
Thailand
Ukraine
57. Uruguay
Sources: Wages: ILO Laborsta and KILM, third edition (2003),
latest available year; Indonesia and South Afrioa:
Labour Force Survey 2004; Thailand (2003, private sector):
Statisticai Yearbook, The Philippines: Bureau of
Labor and Employment Statistics, Employment, Hours and
Earnings Survey, manufacturing establishments with
more than 20 workers; Minimum wage in local currency: ILO
Database on Conditions of Work and Employment
Laws, except Armenia and Azerbaijan: United States
Department of Labor.
To some extent, the level of the minimum wage determines the
degree to
which the minimum wage is actually binding, that is to say,
what fraction of
workers earns roughly the minimum wage, and what fraction
earns less. A low
minimum wage is unlikely to be binding, resulting in few
workers at, or below,
the minimum. Conversely, a high minimum wage is more likely
to be binding,
although it may also be associated with a high level of non-
compliance, i.e. with
many workers receiving a wage below the legal threshold. Data
of the same
quality on the fraction of workers (formal and informal) at, or
below, the min-
imum wage are not available everywhere. However, estimating
these fractions
has become possible for a number of developing countries as
more survey data
have been published and thanks to the renewed interest in
minimum wage set-
ting institutions since the mid-1990s. Using various sources
58. Eyraud and Saget
(2005) provide an overview of the percentage of workers
earning below the
minimum wage in 17 developing countries, while Saget (2006)
produces fur-
ther estimates for informal workers using raw data, which are
reported below
(table 4). For the purpose of this analysis, informality is defined
as not having
an employment record card (Brazil), working casually (India
and Indonesia)
and performing domestic or farm work (South Africa).
What is particularly astonishing is the relatively high fraction
(higher
than expected) of informal workers earning exactly the
minimum wage in
some of these countries. For example, 21 per cent of casual
workers in the con-
struction sector in Punjab, India, were in that situation, against
15 per cent of
casual workers in agriculture. In Brazil, too, a significant
fraction of informal
Fixing minimum wage levels in developing countries 35
Table 4. Percentage of informal workers earning less ttian the
minimum wage
Country Year Percentage
Brazil 2003 35
India (Punjab) 2000 61 (agriculture)
59. 32 (construction)
Indonesia 2004 19-32 (depending on provinces and sectors)
South Africa 2003 45-72 (depending on areas and occupations)
workers - 1 8 per cent - earns exactly the minimum wage, and in
South Africa,
between 10 and 16 per cent of farm workers receive the
minimum wage. By
contrast, no cluster of informal workers at the minimum wage is
observed in
Indonesia, nor in Gujarat, another Indian State, nor among
domestic workers
in South Africa (Saget, 2006). This suggests that in certain
situations, the min-
imum wage is used as a reference wage in the bargaining
between an individual
worker and an informal employer.
How informal workers can also benefit from the minimum wage
can only
be summarized here. First, the simplicity of the concept of the
minimum wage
means that it is well known to the general public, which is the
best way of ensur-
ing it is respected in a sector of the economy largely beyond the
reach of labour
inspectors. Second, the minimum wage must be fixed taking
into account the
wages paid in the informal sector, in order to target the poorest
workers.
Causes of the two policy failures
The next section attempts to describe the motivations and
constraints of devel-
oping countries for setting either very low, or very high
minimum wages.
60. To understand how the minimum wage is fixed, it is instructive
to look
first at the legislation and then at its application. In general, a
number of cri-
teria are used to fix the level of the minimum wage, reflecting
both the needs
of workers and their families and economic factors. As shown in
Eyraud and
Saget (2008), criteria commonly found in the legislation include
the basic needs
of workers and their families, the increase in the consumer price
index, product-
ivity, the level of employment, and the levels of wages and of
social security
benefits. These last two criteria are especially relevant for this
analysis and
should be examined carefully.
Causes of the "mini minimum wage"
In a number of countries, social benefits such as minimum old-
age pension and
disability benefits and, to a lesser extent, maternity benefits and
unemployment
benefits are fixed according to the level of the minimum wage
(for example,
the minimum old-age pension is equal to 75 per cent of the
minimum wage in
Algeria). An analysis of the legislation in 101 countries carried
out by Eyraud
and Saget (2005) shows that about a third of them establish such
a link between
the minimum wage and at least one social benefit. The analysis
also shows that
61. 36 International Labour Review
this link originates in the wish to protect the living standards of
vulnerable
people such as old-age pensioners and disabled persons. This
social policy objec-
tive can, of course, create pressure on social security schemes
and conflict with
the macroeconomic equilibrium. The pressure on social security
schemes, espe-
cially on pensions, can be illustrated with the examples of
Algeria, Brazil and
Uruguay.
In Algeria, it was estimated that the increase in the minimum
wage from
8,000 to 10,000 DZD (Algerian dinars) in 2004 cost 24 billion
DZD per year
($US 310 miUion), due to the indexation of public-sector wages
and salaries and
of benefits; half of this increase was paid for by the State, the
other half, through
the social security schemes."* In Brazil, the drop in the real
value of the minimum
wage between the 1980s and 1990s stems from the fact that the
authorities
wanted to moderate the impact on the massive public deficit of
that period
through the payment of beneflts and pensions (DIEESE; 2004).
The purchasing
power of the minimum wage has since been partly restored; the
ratio of the mini-
mum wage to GDP per capita is now 0.33 (table 1).
The case of Uruguay, up to 2004, exemplifies a minimum wage
62. that fails to
establish a wages floor in the labour market. However, the
minimum wage was
used for other purposes, such as fixing the level of taxes, fees,
social benefits and
many other prices. In this country, the minimum wage
represented 21 per cent
of the average wage in 2003 (table 3). At such a low value,
under 3 per cent of
workers were receiving the minimum wage or even less (ILO,
2004). The analy-
sis undertaken by Furtado (2004) shows that the minimum wage
was used, for
example, in fixing the level of family allowances. Families
whose income lay
between six and ten times the minimum wage received 8 per
cent of the mini-
mum wage per child, while famiHes whose income was less than
six minimum
wages received 16 per cent of the minimum wage per child.
Many other allow-
ances were fixed relative to the minimum wage: maternity
allowance (one mini-
mum wage), seniority bonuses, disability allowance,
unemployment benefit,
marriage allowance for public-sector workers, widow's pension,
and certain
medical benefits. This direct relation between the minimum
wage and a number
of social benefits weighed heavily on the public deficit. This
may be the main
reason why, as shown by the ILO (2004), Uruguay had the
lowest relative mini-
mum wage in the whole region and recorded the largest fall in
the minimum
wage since its mid-1990s level.
63. In 2004, the Government enacted legislation that ended the
links between
the minimum wage and social benefits {Ley de Base de
Prestaciones y Contribu-
ciones, Law No. 17.856 of 20.12.2004), forbidding the use of
the minimum wage
in the calculation of incomes and for indexation purposes. At
the same time,
efforts were made to introduce another mechanism to protect
social security
benefits. This mechanism established a new baseline, which is
equal to the value
of the minimum wage on the date the law was enacted. The
regulation specifies
that the baseline was to be adjusted according to the budgetary
situation of the
Source: Algerian Ministry of Labour and Social Security.
Fixing minimum wage ieveis in developing countries 37
State, to variations either in the consumer price index or in the
average earnings
index by plus or minus 20 per cent at most. This should, in
theory, protect the
level of pensions. Given the short period of time elapsed since
the reform was
passed, it is too early to assess its impact.
The minimum wage in Uruguay was thus de-linked from the
payment of
social security benefits, and a major obstacle to readjusting the
minimum wage
64. disappeared. The minimum wage subsequently increased by 70
per cent in real
terms in 2005, which put it at around 35 per cent of the average
wage.
In some countries, increases in the minimum wage may also put
pressure
on the state budget - not only on social security funds. This is
the case in coun-
tries where the minimum wage is used as a reference wage or a
threshold to fix
wages in the public sector, especially those of government
officials, as in several
former Soviet bloc countries, such as Mongolia and the Russian
Federation. In
Brazil, a number of local government workers receive the
minimum wage. They
represent 5.2 per cent of all public-sector workers, and in the
municipalities of
the North-East region as many as 15 to 20 per cent (DIEESE,
2004).
This section has shown that in some countries minimum wage
legislation
puts pressure on public budgets because social benefits and/or
public wages are
directly linked to the minimum wage. This is a plausible
explanation for low
minimum wages. However, it is not a feature specific to the
"mini minimum
wage" countries. For example, African countries such as Chad
and Burkina Faso
set social benefits on the basis of the level of the minimum
wage, although they
have very high minimum wages (see tables 1 and 2).
65. One also has to remember the context in which "mini minimum
wages"
started to mushroom, namely amidst the structural adjustment
processes of the
1980s-90s. In Mexico, for example, reducing inflation in the
1980s became
the main consideration when fixing the minimum wage:
adjustments were
indexed to expected future inflation, which consistently turned
out to be higher
than anticipated (Marinakis, 1998). The objective of price
stability was therefore
a driving force behind the fall in the minimum wage in Mexico
after the debt cri-
sis of 1982. In former communist countries, another reason why
the value of the
minimum wage dropped so much was that it came to be
perceived as a kind of
symbol of communism, hence not very much in favour after the
start of liberal-
ization in 1990.
In all of these cases, involving links with social benefits and
public wages,
the fight against inflation or an unfavourable political
environment, minimum
wage fixing occurs for reasons other than establishing a wage
floor for workers.
This appears to be the key to explaining "mini minimum
wages". What is the
best way out of this situation? The obvious approach would
seem to be breaking
the link between the minimum wage and social beneflts, while
providing for
some other form of protection for social benefits.
66. Causes of "maxi minimum wages"
Why is the minimum wage in some countries very high with
respect to the value
added per worker or the general level of wages? To understand
this outcome, it
38 Internationai Labour Review
is best to recall how the first minimum wages were set.
Originally, the minimum
wage was set for sectors where collective bargaining was weak.
Weak organiza-
tion of workers and employers actually provided the main
justification for intro-
ducing the minimum wage in Europe at the beginning of the
twentieth century.
Minimum wages in those sectors could then serve as a basis for
collective bar-
gaining on wage scales, as well as on other issues.
Things developed differently in other countries, however. In
this section it
is argued that some developing countries have gone from
negotiating a minimum
wage to negotiating a kind of average wage. A close
examination of the legisla-
tion in some Asian countries indicates that in a number of cases
the minimum
wage is not really a minimum wage, but rather the effective
wage paid to most
unskilled or semi-skilled workers. In Indonesia, for instance,
legislation provides
for exceptions to be made for companies that are not in a
position to pay the
67. minimum wage to their workforce. This practice is clearly
contrary to the basic
definition of the minimum wage as compulsory and not
optional. Indonesian le-
gislation specifies that an agreement must be reached between
employers and
employees. 5 Exceptions seem to be granted fairly easily as
shown by the declar-
ation from the Ministry of Labour during minimum wage
negotiations in the
autumn of 2005, which followed huge increases in oil prices.
According to this
declaration, small enterprises would be asked to show two-year
balance sheets,
while large enterprises would face audits (Jakarta Post, 8
October 2005).
The Philippines is another country where the minimum wage
seems to be
set at a high level (more than 90 per cent of the average wage in
2000, as shown
in table 3). Here, too, legislation allows for small enterprises to
be exempted
from paying the statutory minimum wage. Exemptions may also
be granted
to estabhshments experiencing temporary financial difficulties,
and to new
businesses.^ Domestic workers are paid much lower wages.
Thailand is another clear example of a country where the
minimum wage
is in reality an effective wage. This can be seen from the fact
that, at around
66 per cent of the average wage in 2003, the minimum wage is
fairly close to it
(table 3); and also from the fact that many low-paid workers,
68. such as agricultural,
home- and domestic workers, are excluded from coverage. In
these countries,
minimum wage negotiations tend to become the forum for
collective bargaining
on wages. The minimum wage thus crowds out collective
bargaining.
A fourth example of a "maxi minimum wage" situation is
Paraguay. As the
minimum wage in Paraguay is almost equal to the average wage
(table 3), it
clearly does not represent a threshold for unskilled-labour
wages. The mini-
mum wage legislation of Paraguay is highly complex and
provides for a minimum
wage for "unspecified activities" and a minimum wage for
"specified occupa-
5 Regulation of the Manpower Minister No. Per-Ol/MEN/1999
on minimum wages, article
24; Law on Manpower Affairs (No. 25 of 1997), article 90 (2).
* Rules on exemption from compliance with the prescribed
wage increases/cost of living allow-
ances granted by the Regional Tripartite Wages and
Productivity Boards, Department of Labor and
Development, National Wages and Productivity Commission
(NWPC) Guidelines No 1 Series of
1996, dated 18 November, 1996.
Fixing minimum wage levels in developing countries 39
tions", which acts as a kind of wage scale. Domestic workers,
69. young workers and
apprentices are not entitled to the minimum wage for
"unspecified activities"
but to a much smaller percentage of it, ranging between 40 and
60 per cent.'' As
these three categories of workers are traditionally among the
lowest-paid and
hence, typically, minimum wage earners, their exclusion is a
strong indication
that the minimum wage is not really a minimum wage but rather
an effective
wage. The triple fixing mechanism of sub-minimum wages, a
minimum wage for
"unspecified activities" and minimum wages for "specified
occupations" mean
that the minimum wage system in Paraguay has a strong effect
on the wage struc-
ture. This means that many wages are determined by minimum
wage legislation.
Marinakis and Velasco (2005, p. 10) conclude from their review
that: "Minimum
wages in Paraguay are not a floor, they are the effective wages
paid in the mod-
ern private sector; hence they are a central element of wage
policy. The system,
which was established to counteract the weakness of collective
bargaining, is
turning into a system which prevents the development of
bargaining."
Thus, minimum wage negotiations tend to become a platform
for actual
wage negotiations in a range of countries. This result seems to
be independent
from the minimum wage fixing procedure. Further examples
include Thailand
70. and Paraguay where tripartite bodies make recommendations to
the (regional)
government concerning adjustments to the minimum wage. In
the South Afri-
can clothing industry, too, there are indications that the
minimum wage corre-
sponds quite closely to actual wages; and here minimum wages
are fixed by
collective agreement within bargaining councils. In the
Philippines, they are
fixed by a tripartite body.^
What can be done to get out of a "maxi minimum wages"
situation? Many
would argue for the simple removal of the minimum wage, on
the grounds that
it fails to fulfil the main objective of protecting the living
standards of low-paid
workers. Given the above observation that the minimum wage is
in fact a substi-
tute for wage negotiation, another solution would be to set the
minimum wage
at a lower level and develop collective bargaining on other
wages. Lowering the
minimum wage is of course politically difficult to do. An
important practical
question also arises: how does one manage a move to a lower
minimum wage?
Could employers immediately reduce workers' wages, for
example? Or would
workers on the old minimum wage have their wages frozen until
inflation
brought the new minimum wage up to the former level? These
are very delicate
political issues that deserve some exploration, in particular to
find out what guar-
71. antees might be given (by governments and employers) to
rigorously enforce a
new, lower minimum wage (rather than permit exceptions,
expressly or tacitly,
as at present). Furthermore, developing collective bargaining
raises other prob-
lems. Clearly, the minimum wage crowds out collective
bargaining in Thailand
and, in theory, bargaining could be strengthened by diminishing
the statutory
' ILO Database on Conditions of Work and Employment Laws,
available at www.ilo.org/
travdatabase.
8 ibid.
40 International Labour Review
process of minimum wage fixing. In reality, bargaining is
hardly a solution to
anything in Thailand, since trade union density there is barely
above 1 per cent
in the private sector.
A more practical solution would be for trade unions, employers'
repre-
sentatives and officials from the Ministry of Labour (as well as
academics and
international organizations) to recognize, or be aware of, the
role of the mini-
mum wage in different countries. Countries cannot be treated as
applying the
same minimum wage policy. The process of negotiating
72. minimum wages varies
considerably between the two extreme situations outlined above,
when the
minimum wage serves two widely different purposes. These two
situations
illustrate the danger of having fewer policy instruments than
policy goals.
Concluding remarks
This article compared the level of the minimum wage with three
estimators of
productivity and wages (GDP per capita, GDP per worker and
average wage)
for a number of countries. On the basis of these three estimators
of wages, the
article showed that two groups of developing countries find
themselves in
extreme situations with respect to the minimum wage: one has
very low mini-
mum wages ("mini minimum wages") and the other, very high
minimum wages
("maxi minimum wages"). The article pointed out that,
depending on the
choice of estimator, the ranking of some countries changed.
This change was
explained by the specific production structure of some export
countries, under-
estimation of the informal economy in former Soviet bloc and
other countries,
and differences in the sectors/occupations/regions used to
calculate minimum
and average wages.
The article also provides evidence on the effect of the minimum
wage on
informal wages in a few developing countries, showing that
73. under certain con-
ditions, the minimum wage may also benefit informal workers.
Focusing on "mini minimum wage" and "maxi minimum wage"
countries,
the rest of the article sought to explain these two extremes. On
the one hand, it
showed that the link between the minimum wage and the level
of social benefits
and public wages, structural adjustment and an unfavourable
political environ-
ment might be a major explanation for the existence of a "mini
minimum wage"
in Uruguay, Mexico and former Soviet bloc countries.^ On the
other hand, an
examination of the legislation in Indonesia, Paraguay, the
Philippines and Thai-
land - taken as illustrative of "maxi minimum wage" countries -
revealed that in
these countries the minimum wage is not set to establish a wage
floor in the
labour market for unskilled workers. Indeed, several categories
of low-paid
workers are excluded from coverage, and the minimum wage
tends to be fixed
at a level close to the actual wage.
' Recently, many former Soviet bloc countries have tried to
remove the link between the
level of the minimum wage and the payment of social benefits.
Fixing minimum wage levels in developing countries 41
These two situations create problems. In "mini minimum wage"
74. coun-
tries, such as Uruguay, the biggest problem until the reform of
December 2004
was the absence of a wage reference in the labour market on the
basis of which
other wages could be fixed or negotiated. The social partners
and, especially,
the Ministry of Labour, felt the need for an effective minimum
wage that could
act as a floor in the labour market. The system was
subsequently reformed to
end the links between the minimum wage and social benefits
while tentatively
establishing a mechanism to protect the level of social benefits.
In "maxi minimum wage" countries, the high level of the
minimum wage
results in widespread non-compliance and prevents the
development of collect-
ive bargaining. In Indonesia for example, 30 per cent of all full-
time workers
earn below the minimum wage. This percentage increases to 50
per cent for
full-time casual workers, i" The minimum wage therefore fails
to protect vul-
nerable and low-paid workers in this country. It is currently set
as an effective
wage for workers in the private formal sector, or even as a
maximum wage. It
would appear that the labour movement in Indonesia is aware of
the danger
that the "maxi minimum wage" situation entails for collective
bargaining."
How did such a situation develop? In this article, I have argued
that in
75. cases where minimum wage negotiations are the only forum
where trade
unions can act to protect workers' interests, the minimum wage
tends to be set
as an effective wage for a sizeable group of workers, and not as
a threshold at
the lower end of the labour market. The "maxi minimum wage"
situation is
therefore a consequence of the weakness of collective
bargaining. However, by
focusing almost entirely on the minimum wage, collective
bargaining does not
develop on other issues. Thus "maxi minimum wage" situations
might also be
a cause of the weakness of collective bargaining.
References
DIEESE (Departamento Intersindical de Estatística e Estudos
Socio-Econômicos). 2004.
Inter Trade Union Department of Statistics and Socio-Economic
Studies Newsletter.
Sao Paulo. May.
Eyraud, François; Saget, Catherine. 2008 (forthcoming). "The
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ting institutions", in Janine Berg and David Kucera (eds): In
defence of labour market
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York, NY, Palgrave Mac-
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— ; —.2005. The fundamentals of minimum wage fixing.
Geneva, ILO.
Furtado; Magdalena. 2004. Impacto social y económico del
salario mínimo. Santiago, Chile,
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'" Indonesia's 2004 Labour Force Survey.
" A trade union leader in Indonesia has publicly stated that too
much attention was paid
to the minimum wage, to the detriment of other issues.
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Marinakis, Andrés E. 1998. Minimum wage fixing in Mexico.
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— ; Velasco, Juan Jacobo. 2005. Análisis de la evolución
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—. 2001. "Poverty reduction and decent work in developing
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Running Head: E-SONIC STRATEGIC ANALYSIS 1
E-SONIC STRATEGIC ANALYSIS 4
E-Sonic Strategic Analysis
Executive Summary
This paper will do an analysis of the external and internal
environments of E-Sonic, the digital subsidiary of sonic
78. records. The specific areas that it will focus on are the
classification of the company in the North American Industry
Classification System, the Industry profile, the competitors, the
foreign demand, the long-term prospects and the labor market
assessment. Internally, the paper will look at the functional
capabilities and the human resource capabilities of the
organization.
Analysis of External Environment
According to the North American Industry Classification
System, -Sonic falls under two categories that have two
different codes: 334614 and 512220. The first category 334614
deals with reproduction of media and software on magnetic and
optical media. This deals with compact discs reproduction of
music, videos, and software. The second category 512220 is
engaged in the production, promotion, and distribution of
media. This means that it also produces, releases, promotes and
distributes sound recordings and videos.
Industry profile
The music production and distribution industry have greatly
changed over the years with the development in technology. The
mother company of E-Sonic called Sonic Records was a leading
producer, promoter, and distributor of music boasting up to 15
billion dollars in sales. However, with the changing face of
technology and music consumption, these sales have reduced.
This is so since the consumption of compact discs has reduced
over time. People listen to music and other digital content
online on applications such as iTunes and SoundCloud or other
online radio stations such as IHeart radio. This led to the need
for the development of a platform that distributes this digital
content online, thus the creation of E-Sonic.
Competition
There are a lot of already established online music stores such
as iTunes and Amazon and customizable radio stations such as
Pandora that are the main competition for E-Sonic. To stay
ahead of the competition, it is necessary for E-Sonic to create a
software platform that is user-friendly and offers more
79. functionality than their competition. E-Sonic also has
competition from content pirates who also distribute their
content at a cheaper rate.
Foreign Demand
Demand for digital music and videos is growing all over the
globe. In many countries such as the United States, Sweden,
Norway and India, digital sales already make up more than half
of the sales in music (Garside, 2014). This means that
distribution through digital channels is quickly becoming the
norm not just in the United States but globally which mean
there is rising demand for the digital music that E-Sonic
produces even outside the state.
Long-Term Industry Prospects
According to PwC (Price Waterhouse Coopers), the digital
demand for music is going to increase further into 2018. It is
estimated that of the total sales in the music industry, two thirds
will come from digital sales. This means that the long-term
industry prospects are not only good but very encouraging for
sustaining business into the future (Moore and Domingo,2014).
Labor Market Assessment
E-Sonic has demand for a unique labor force due to their digital
platform. The company has the need for software engineers and
web technicians who will work to make the system more
interactive and the customer experience more pleasurable. The
engineers at E-Sonic earn an average wage of 14.70 dollars per
hour as of May 2012 and this is expected to rise with time by an
estimated 13 percent by 2022 (Pfanner, 2013). This means that
their employees are earning above the minimum wage by a
comfortable margin.
Analysis of Internal Capabilities
Functional capabilities
Through focusing on the functional areas of the company such
as engineering, marketing, human resource, research, and
development among other, E-Sonic will be able to keep the
products and services that it offers at a competitive margin in
80. comparison to the other producers of the same content. Focusing
on research and development will ensure that it stays ahead of
the digital race.
Human Resource Capabilities
Like all other organizations, E-Sonic is mainly preoccupied
with getting skilled labor and retaining them. This means that
they focus on initiatives to ensure that their employees are well
motivated through compensation and welfare.
References
Garside, J. (2014, March 18). Music streaming breaks through
$1bn sales barrier. Retrieved from http://www.theguardian.com
Moore, F., & Domingo, P. (2014). IFPI Digital Music Report
2014. Retrieved from http://www.ifpi.org/
Pfanner, E. (2013, February 26). Music Industry Sales Rise, and
Digital Revenue Gets the Credit. Retrieved from
http://www.nytimes.com/2013/02/27/technology/music-
industry-records-first-revenue-increase-since-1999.html
! Health Issues
Culture, Infrastructure
and International
Health Benefits Delivery
by Allen Koski, CEBS
When selecting a health insurance carrier for international
employees, it is
advantageous to recognize that valid assumptions made when
selecting
domestic benefits simply do not apply in the international realm
81. and can lead
to costly errors. This article examines some scenarios and
cultural anomalies
that invalidate commonly accepted domestic health insurance
practices. It
explores strategies for simplifying benefit design, providing
access to quality
care abroad, assessing costs, minimizing overseas risks and
understanding
the cultural impact on health care delivery.
SIMPLIFYING THE PLAN, ENHANCING
THE EXPATRIATE EXPERIENCE
C
opayments and deductibles are widely
accepted domestically, but they can be
problematic when exported overseas.
International health professionals
aren’t accustomed to accepting a com-
bination of cash from patients and pay-
ment guarantees from insurance com-
panies. They may view the requisite
international phone calls and currency
exchange as unnecessarily burdensome,
and may be reluctant to treat individuals if the insur-
ance plan requires member out-of-pocket administra-
tion. Employees may face the difficult decision of
paying for services upfront or seeking treatment with
another health professional. On a recent visit to four
countries in the Persian Gulf, the author heard multi-
ple firsthand anecdotes from very vocal employees
lobbying against plan designs with copayments and
deductibles. Employers have the opportunity to over-
come some barriers to medical care delivery by se-
82. lecting a plan without point-of-service member cost
sharing.
The table compares a typical domestic-type plan
against a model that provides greater consideration
to the needs of expatriate employees and interna-
tional health care practitioners. The recommended in-
ternational model eliminates deductibles to simplify
the expatriate experience, but does not provide expa-
triates with a free ride. In exchange for eliminating
the deductible, the out-of-pocket maximum increases
by the same amount as the deductible, $200/$400 in
this example. Although the table provides a basic
model that demonstrates deductible and out-of-
pocket manipulations only, the same tactic can be ap-
plied to other elements of member cost sharing, such
as copayment and coinsurance. The objective is to en-
hance the expatriate’s health care delivery experience
by shifting member cost sharing away from the point
of service to administrative transactions that are
transparent to the provider.
Language, currency and culture complicate the
administration of health benefits for international
employees, resulting in issues and challenges that
domestic employees do not face. Benefits managers
can alleviate the complexity by selecting an insur-
ance company with the experience, resources and
global presence necessary to negotiate the intricate
BENEFITS QUARTERLY, First Quarter 2006 19
20 BENEFITS QUARTERLY, First Quarter 2006
83. cultural norms that can inhibit appropriate delivery
of care.
“Dealing with additional layers of complexity and
stress are normal conditions for expatriates living and
working in a foreign culture. The last thing they need
is the added burden of sorting out ambiguous insur-
ance benefits and tricky administrative protocols
while undergoing medical treatment in a foreign en-
vironment,” suggests Noel Kreicker, president, IOR
Global Services.
DOES NETWORK SIZE MATTER?
Health practitioner network size is one common
benchmark for selecting a domestic benefits carrier.
Benefits managers can safely assume that domestic
plan network professionals meet minimum licensing
and credentialing standards as plans strive to com-
ply with regulation, quality accreditation and indus-
try standards. The same minimum quality standards
do not necessarily apply in other parts of the world.
A large list of unscreened practitioners is not nearly
as valuable as a network that has been subjected to
rigorous physician-reviewed quality standards.
Elizabeth Hermann, IOR Global Services’ direc-
tor of training, notes the importance of health prac-
titioner quality, particularly in an emergency: “Some
of the foremost expatriate concerns are around
health care and coping with medical emergencies.
Many employees curtail their overseas assignments
because they and their families are adversely
affected by health care professionals that are sub-
standard.”
84. It is also important to consider the geographic dis-
tribution of the practitioner network. If the network
has high concentrations of practitioners in large in-
ternational cities but few choices in smaller cities and
remote areas, the network may not meet the needs of
the employer’s expatriate population. Travel time
and expense for health care appointments in major
metropolitan areas can be hidden factors that esca-
late the true cost and negatively impact employee
satisfaction.
THE COST
OF OVERSEAS CARE
Benefit managers who have witnessed a continu-
ing trend of double-digit annual rate increases may
assume that the cost of health care is more expensive
in the United States compared to overseas locations.
While this may be true in some cases, it is inaccurate
to make that assumption across the board. In Japan,
for example, immunizations are much more expen-
sive due to the lack of local manufacturing. Most vac-
cines must be imported, thus raising the delivery
cost.
Highly compensated expatriates in a medical need
scenario are not necessarily the most cost-conscious
consumers. In an unfamiliar environment facing a real
or perceived urgency, they will likely seek care
through health professionals and facilities that allevi-
ate their concerns and approach the standard of care
they are accustomed to receiving in their home coun-
try. They will often seek care from prominent, presti-
gious health professionals and facilities, with com-
mensurate fees.
85. The cost of care may also be impacted by the
availability of local specialists. In remote locations,
specialty or even primary care may not be readily
available. Transportation and evacuation costs must
be considered when evaluating the overall cost of
care.
Expatriate members may also experience increased
administration costs due to local infrastructure limita-
tions. In Qatar, there is no international telephone ser-
vice provider, such as AT&T, to facilitate overseas call-
ing. Further, toll-free telephone calls to U.S. numbers
are not accessible from many overseas locations. Calls
to the United States to resolve claims issues, for exam-
ple, may exceed $3 per minute. A low-cost alternative,
if accepted by the insurance carrier, is to send scanned
claims as an e-mail attachment.
The cost of international health care is indeed
high, but the expense can be alleviated by selecting a
specialized international benefits carrier. Their ex-
pertise can achieve efficiencies and savings that
! TABLE
DOMESTIC VS. INTERNATIONAL BENEFITS DESIGN
MODEL
Typical Recommended
Domestic Model International Model
Deductible $200/$400 N/A
Out-of-Pocket Maximum $1,000/$2,000 $1,200/$2,400
86. BENEFITS QUARTERLY, First Quarter 2006 21
nearly always result in lower overall premium cost
than carriers that offer benefits based on the U.S. do-
mestic model.
BEST PRACTICES: INTERNATIONAL
CLAIM EXPERIENCE REPORTING
AND ANALYSIS METHODOLOGY
When examining expatriate claim experience, em-
ployers should avoid generating reports based on the
current population of the group’s domestic plan, as it
may result in faulty analysis. For example, consider a
scenario in which an employee leaves international as-
signment due to health issues in March, incurring
$20,000 in claims. If a claims experience report is gener-
ated in July using the current domestic population data,
the claim data would be artificially low by $20,000.
Even if this expatriate were included in the population,
the home office staff may not recognize that the host
country operations may enroll the expatriates into the
local group medical plan or pay for an individual med-
ical policy due to assignment necessity, legal issues or
service issues. In such a case, the claims paid by an alter-
nate plan would not be captured in the reporting that
considers only the group’s primary coverage.
Reporting may not capture claims data for carved
out programs’ prescription drug and employee assis-
tance plan (EAP), as well as amounts above the stop-
loss threshold, claims covered by the previous medical
carrier and claims put on corporate expense accounts.
Maurice “Beau” Gable, a broker with International
87. Insurance & Investments observes, “The hidden
expenses of international health care are typically
greater than what the home office has anticipated.
When comparing an international medical plan to
the current U.S. domestic plan, benefits managers
should consider the nonbudgeted items that impact
the total cost such as reimbursement charges, staff
time for claims assistance, expatriate time resolving
administrative issues, increased costs resulting from
treatment delays, and expensed items. If the finance
department determined the true total of how much
they spend per year for the international claims and
interest, they would change plans overnight. The cost
can be further inflated if expatriates use credit cards
to pay for health services, because many credit card
companies now charge 1% for foreign purchases. In-
ternational health care expenses are like an iceberg.
The hidden expenses of corporate staff time, local staff
time, expatriate time, medical claims cost shifting,
postponed treatments, taxes and fines, health related
returns, reimbursements and local coverage costs
might actually be larger than the cost of the budgeted
premium equivalent.”
NAVIGATING INTERNATIONAL RISKS
Self-insurance is an option that many large employ-
ers entertain as a cost-saving strategy. By adopting the
risk, self-insurers potentially can save thousands of
dollars. In the international arena, self-insurance isn’t
as attractive an option. In the United States, it is rela-
tively easy to void, trace, reissue and reconcile lost
checks. Tracing lost checks internationally is fre-
quently not feasible. This puts the international self-in-
surer at risk of not only paying the claim, but also co-
ordinating with international banks and postal
88. systems in a reconciliation effort that is often much
larger than anticipated.
International employers and expatriate employees
are typically subject to the numerous rules and regu-
lations of the host country. Covering international as-
signees on an insurance plan that is designed for U.S.
domestic employees is likely to be an inadequate
strategy from a benefits delivery and legal compli-
ance perspective. Some insurers have established re-
lationships with local insurers in countries that may
have restrictions or prohibitions on foreign insurance
carriers, which enables them to comply with host
country laws and obtain network discounts while pro-
viding members with comprehensive, worldwide cov-
erage and extensive access to local health care
provider networks. Direct provider payment agree-
ments may be in place, reducing the likelihood that
members will have to pay out of pocket and submit a
claim for reimbursement.
Prescription medications require special handling
and attention. Importing a long-term supply may
compromise efficacy. Mail ordering may result
in customs challenges and some FDA-approved
prescription drugs are illegal in certain countries.
! THE AUTHOR
Allen Koski, CEBS, is CIGNA International’s
director of international sales for the mid-
Atlantic region. He has been actively involved in
developing and supporting international health
care, dental, disability and travel medical plans
that multinational employers provide to inter-
national assignees, traveling executives and key
89. local nationals employees. Mr. Koski earned
a bachelor of arts degree from Drew University
and has attained his Certified Employee Benefit
Specialist (CEBS) designation. He is a fellow of
the International Society of Certified Employee
Benefit Specialists.
22 BENEFITS QUARTERLY, First Quarter 2006
It is important to select a benefits carrier experi-
enced in assisting members with overseas pharmacy
fulfillment.
CULTURAL CONSIDERATIONS
Culture plays a role in health care delivery and
payment. For example, a U.S. domestic plan typically
would not cover acupuncture, but coverage for these
services would be expected in China. Similarly, a
claim from a doula, or nonmedical midwife, would
likely be rejected on a U.S. domestic claims model,
but payment would be appropriate if care was deliv-
ered in Singapore, where doulas are common. Even
obtaining routine care is more difficult and complex
while on assignment abroad.
“In a foreign country, a simple bout of influenza
seems more serious than it does in the home country.
Expatriates greatly value the assurance that they will
be supported in matters of life and death by a caring
and responsible health insurance company that will en-
able them to consult quality health care suppliers with
minimum hassle,” Ms. Hermann observed.
90. When selecting an international health benefits
carrier, it is important to choose a carrier that has
built its infrastructure specifically to handle issues re-
lated to international health delivery and recognizes
the importance of cultural issues in facilitating and fi-
nancing health care delivery.
Greg Kirkwood, vice president, business develop-
ment with RELO Direct, Inc., notes, “Applying do-
mestic health care plans to international assignments
just doesn’t work for today’s global work teams, ex-
patriates and their families, and third-country nation-
als. Employers want to attract and retain their top
candidates to accept foreign assignments and must
now provide comprehensive health and welfare ben-
efits, including evacuation services if necessary, to get
acceptance.”
An understanding of the health system in the host
country is necessary to effectively manage delivery of
care. In the United States, it is safe to assume that
publicly funded institutions are less expensive than
those in the private sector. In Switzerland and several
other locations, expatriates can expect to pay more at
a public hospital than a private hospital. Health sys-
tems vary widely throughout the world. It is impor-
tant that the member have the resources and guid-
ance of an insurer with an international presence so
that he or she can receive the most appropriate care
locally available.
CONCLUSION:
SELECT AN INTERNATIONAL PLAN
DESIGNED FOR EXPATRIATES
91. Seasoned expatriates are increasingly sophisti-
cated and have elevated expectations regarding
health benefits while on assignment. Mr. Kirkwood
observes, “Top foreign assignment candidates are
aware of and are demanding true international health
and welfare benefits before accepting assignments
abroad. Expatriates talk in a global community so
employers must constantly stay competitive by offer-
ing true international benefits.”
Noel Kreicker, president of IOR Global Services
adds, “Industry norms are closely monitored by
overseas populations. If a company provides a sub-
standard benefits package, the result is a negative
image overseas accompanied by a barrage of com-
plaints to HR.” !
. . . a claim from a doula,
or nonmedical midwife,
would likely be rejected
on a U.S. domestic claims model,
but payment would be appropriate
if care was delivered in Singapore,
where doulas are common. !
OL 325: Final Project Guidelines and Rubric
Overview
Acting as a recently hired compensation consultant, you will
92. assist the burgeoning online music firm e-sonic to develop an
internally consistent and market-
competitive compensation system that recognizes the
achievements of individual contributors. The major portion of
the project is divided into three milestones,
which will build upon the previous milestone. The milestones
are submitted in Modules Three, Five, and Six. The final
version of the entire project will be due at
the end of Module Seven.
Sample report outlines are included in the project text found in
MyManagementLab. Each of the sections for this assignment
will be submitted via Brightspace.
Outcomes
The project helps students to meet the following course
outcomes:
• Students will gain an understanding of the evolution and
administration of compensation and benefit programs for
organizations
• Students will explore wage theory, principles and practices,
unemployment security, worker income security, group
insurance, disability insurance,
and pension plans and how these compensation and benefit
items are balanced to provide incentive and recruitment of a
high-performance
workforce
• The connection between the organization’s mission,
objectives, policies, and the implementation and revision of
their respective compensation and
benefit systems will be analyzed to gain a deeper understanding
93. of the importance of such systems to the organization’s overall
human resource
management
• At the conclusion of this course, students will be able to
demonstrate the acquisition and application of theories and
concepts that support the
enhancement and proficiency in 7 primary competencies:
strategic approach, research, teamwork, communication,
analytical skills, problem solving,
and legal and ethical practices
Preparation
1. Read the Building Strategic Compensation Project narrative
linked in the course menu of the MyManagementLab home
page. Note: Section 3:
Recognition of Individual Achievements WILL NOT be
included in the course project.
2. Download the Comp Analysis Software Microsoft Excel file.
Directions on accessing this file are located in the Module
Resources section of Module One.
To run on a PC, the file requires Microsoft Excel 2007 or later.
To run on a Mac, the version requires Excel 2011 or later.
o NOTE: Users of the CompAnalysis software must set the
macros to a low level in order for the software to work. If the
macros are set on too high of a
security level, then the software will be disabled and will not
work properly. Navigate to the Tools menu, click Macros, and
then click Security. Lower
the security level, save the spreadsheet, close, and re-open.
94. o Click on the External Market Survey feature, which will be
used in Section 2 of the project, titled Market Competitiveness.
Make your decisions first
by following the directions in the Building Strategic
Compensation Project (Appendix 3 in the student version,
Appendix 5 in the instructor's version)
and jot down the pertinent information on paper.
o After completing the External Market Survey section, move
on to the Merit Pay Planning feature, which will be used in
Section 3 of the project, titled
Recognition of Individual Achievements. Input your choices as
indicated in CompAnalysis and analyze the data.
Milestones
Milestone One: Strategic Analysis
The development of a strategic analysis guides all decisions
made regarding your compensation systems throughout the
project. The strategic analysis reveals
firm-specific challenges, objectives, and initiatives that allow
you to align the goals of a compensation system effectively with
those of the company strategy.
The strategic analysis allows you to better understand the
external market challenges e-sonic faces in addition to its
internal capabilities. As a consultant, a
thorough understanding of e-sonic’s business environment
allows you to better align your competitive system design with
e-sonic’s goals, challenges, and
objectives. Follow the outline below when completing this
95. portion of the project.
The strategic analysis is fully described in the
MyManagementLab Building Strategic Compensation Systems
casebook for faculty and students, linked in the
course menu in MyLab. Follow the explanations and outline to
complete this milestone.
Strategic Analysis Outline:
1. Executive Summary (Concisely conveys the project
objectives and main findings. The executive summary is
completed last, but included first in the
strategic analysis.)
2. Strategic Analysis
a) Identification of e-sonic’s industry based on the North
American Industry Classification System (NAICS)
b) Analysis of e-sonic’s external market environment
i. Industry Profile
ii. Competition
iii. Foreign Demand
iv. Long-Term Industry Prospects
v. Labor-Market Assessment
c) Analysis of Internal Capabilities
i. Functional Capabilities
ii. Human Resource Capabilities
Each section of the final project should be 5–7 pages in length.
The Strategic Analysis section is due at the end of Module
Three. It will be graded with the
Milestone One Rubric.
96. Milestone Two: Section 1: Internally Consistent Job Structures
Section 1 introduces you to the specification of internally
consistent job structures. Through writing job descriptions, the
development of job structures, and
both the development and implementation of a point evaluation
method to quantify job differences objectively, you build the
framework for internal equity.
In Section 1, you will focus on building an internally consistent
compensation system. An internally consistent compensation
system design will clearly define the
relative value of each e-sonic sample job, creating a job
hierarchy and an objective rationale for pay differences.
As an e-sonic consultant, you are offered a sample of e-sonic
jobs in Section 1. Currently, e-sonic employs 100 people and
will be hiring many more. However, for
the purpose of this simulation, you are asked to work with the
sample of four jobs offered (see Appendix 2 for sample jobs,
located in the MyManagementLab
project tab). Limiting the number of jobs removes one level of
complexity from the simulation and allows you to focus on
learning the functions of compensation
system design. The framework you develop classifying sample
jobs can easily be adapted in the future to include all e-sonic
positions.
Section 1 Outline:
1. Create Job Descriptions
2. Create Job Structures
97. 3. Build Point Evaluation Method
a) Select benchmark jobs.
b) Choose compensable factors based upon benchmark jobs.
c) Define factor degree statements.
d) Determine weights for each compensable factor.
4. Calculate Point Values for e-Sonic Jobs
a) Determine point value for each compensable factor.
b) Use the job evaluation worksheet to calculate point values
for each position.
c) Distribute points for each compensable factor across degree
statements.
d) Rate jobs using point method.
e) Individually rate jobs to ensure reliability.
f) Resolve any discrepancies in point totals.
g) Rank jobs in each job structure according to results of your
point evaluation.
Each section of the final project should be 5–7 pages in length.
Section 1: Internally Consistent Job Structures is due at the end
of Module Five. It will be
graded with the Milestone Two Rubric.
Milestone Three: Section 2: External Competitiveness
Section 2 shifts your focus outside of the firm to understand its
relationship with the external marketplace. You will use market
survey data to compare pay
rates of positions inside the firm with those in the marketplace
to establish the foundations of market-competitive pay. The
analysis of market data also leads
you to the determination of appropriate pay-policy mixes for
each of its job structures. In this section, you are asked to use
CompAnalysis software developed by
Howard Weiss at Temple University, which is also available in
98. MyManagementLab.
In Section 2 of this simulation, you will shift your focus from
concentrating on e-sonic’s internal consistency to its external
competitiveness. First, you will be
introduced to the tools compensation professionals use to
allocate total compensation most effectively within job
structures. Many employees are unaware that
their total compensation consists of much more than just base
pay. Compensation professionals allocate total pay (for
example, base pay, benefits, and different
types of incentives) to motivate employees in different ways.
You will use some of these tools to develop pay policy mixes
for each e-sonic job structure. Next,
you will consider pay policy level decisions for each job
structure.
You will then use CompAnalysis (the included software
program) to conduct an external market survey. Specific
instructions provided with the software program
will guide you through the steps involved in the compensation
survey exercise. Finally, you will report survey findings,
interpreting regression analysis results
generated by the software, and provide an explanation of major
decisions reached.
Section 2 Outline:
Executive Summary Findings
1. Determine Appropriate Pay-Policy Mix
2. Pay-Policy Level Decisions
3. Compensation Survey
99. a) Choose competitors based upon industry, size, and union
status.
b) Select benchmark jobs for each structure using benchmark
job descriptions.
c) Reconcile differences using the benchmark job comparison
sheet.
d) Update salary data for inflation using CPI-U.
4. Implementation of Salary Survey Results
a) Report and interpret results of regression analysis for each
job.
b) Integrate external and internal structures by creating pay
grades and ranges.
c) Evaluate and summarize decisions made for each job
structure.
Each section of the final project should be 5–7 pages in length.
Section 2: External Marketplace is due at the end of Module
Six. It will be graded with the
Milestone Three Rubric.
Final Submission:
The final project is due at the end of Module Seven. This
version will include all revisions based on feedback from your
instructor to the Executive
Summary/Strategic Analysis, Section 1: Internally Consistent
Job Structures, and Section 2: External Competitiveness. It
should be prefaced with a 1–2-page
historical perspective on compensation and close with a 1–2-
page summary of how you used strategic approach, research,
communication, analytical skills, and
problem-solving to present a compensation package tailored for
e-sonic. Each section of the final project should be 5–7 pages in
100. length. This submission will be
graded with the Final Project Rubric (below).
David Goldman
Final Project Rubric
Requirements of submission: Each section of the final project
must follow these formatting guidelines: 5–7 pages per section,
double spacing, 12-point Times
New Roman font, one-inch margins, and discipline-appropriate
citations.
Critical Elements Exemplary (100%) Proficient (85%) Needs
Improvement (55%) Not Evident (0%) Value
Historical
Perspective
Meets “Proficient” criteria and
includes pertinent facts that
demonstrate a sound grasp of
the historical perspective
Describes compensation in the
U.S., including several facts
from a historical perspective
101. Describes compensation in the
U.S., including facts from a
historical perspective, but may
have gaps in the chronology
Does not present a historical
perspective of compensation in
the U.S.
10
The Strategic
Analysis
Provides in-depth analysis that
includes an executive summary
and the strategic analysis with
all of the elements of the
outlines provided in the Building
Strategic Compensation Project
documentation, demonstrating
a complete understanding of all
concepts
Provides in-depth analysis that
includes an executive summary
and the strategic analysis with
most of the elements of the
outlines provided in the Building
Strategic Compensation Project
documentation
Provides an analysis that
includes an executive summary
102. and the strategic analysis with
some of the elements in the
outlines provided in the Building
Strategic Compensation Project
documentation
Does not provide an analysis
that includes an executive
summary and/or the strategic
analysis with elements in the
outlines provided in the Building
Strategic Compensation Project
documentation
20
Section 1: Internally
Consistent Job
Structures
Provides in-depth job structures
with all of the elements of
Section 1 of the Building
Strategic Compensation Project
documentation
Provides all job structures with
most of the elements of Section
1 of the Building Strategic
Compensation Project
documentation
Provides most job structures
with some of the elements of
Section 1 of the Building
103. Strategic Compensation Project
documentation
Does not provide job structures
with elements of Section 1 of
the Building Strategic
Compensation Project
documentation
25
Section 2: External
Competitiveness
Provides in-depth market
competitiveness report with all
of the elements of the outline
provided in Section 2 of the
Building Strategic Compensation
Project documentation
Provides market
competitiveness report with
most of the elements of the
outline provided in Section 2 of
the Building Strategic
Compensation Project
documentation
Provides market
competitiveness report with
some of the elements of the
outline provided in Section 2 of
the Building Strategic
104. Compensation Project
documentation
Does not provide market
competitiveness report with
elements of the outline
provided in Section 2 of the
Building Strategic Compensation
Project documentation
25
Summary Presents a 2-page summary
explaining in depth use of
strategic approach, research,
communication, analytical skills,
and problem-solving to present
a compensation package
tailored for e-sonic
Presents a 1-2-page summary
explaining use of Strategic
Approach, research,
communication, analytical skills,
and problem-solving to present
a compensation package
tailored for e-sonic
Presents a 1-2-page summary
explaining use of some of the
elements such as strategic
approach, research,
communication, analytical skills,
and problem-solving to present
a compensation package
105. tailored for e-sonic
Does not present a summary
explaining use of strategic
approach, research,
communication, analytical skills,
and problem-solving to present
a compensation package
tailored for e-sonic
10
Writing
(Mechanics/
Citations)
No errors related to
organization, grammar and
style, and citations
Minor errors related to
organization, grammar and
style, and citations
Some errors related to
organization, grammar and
style, and citations
Major errors related to
organization, grammar and
style, and citations
