Shannon Keller has been the HR Vice President at Exactitude Manufacturing, a firm that manufactures engine parts for aircraft engines and power generation equipment in four factories in Kansas, Missouri, Texas, and New York for 3 years. Much of that time has been spent developing a new system that aligns HR strategy with Exactitude’s organizational emphasis on high‐quality manufacturing. New demands for higher productivity and product quality call for increased training and integration of more complex technology in the manufacturing process. The new system realigns wages for production employees, assemblers, inspectors, trainers, and machinists into five tiers in place of the previous system that had six pay grades. The new tier system is based on skills, training, and responsibility.

• Tier 1 Production and Assembler 1 workers receive a base wage. These positions are entry level and require little training. Minimal skill levels are necessary. 

• Tier 2 Inspector 1 workers receive $0.25 per hour over base pay. They inspect work done by Production 1 and Assembler 1 for accuracy and quality of work. The Inspector position requires continuous training to meet quality standards.

• Tier 3 Assembler 2 workers receive $0.50 over base pay. They are responsible for running essential equipment. The position requires ongoing training and continuous improvement.

• Tier 4 This tier includes Inspector 2, Production 2, and Trainers who receive $0.75 over base pay. These positions require skill in running precision equipment, training new employees, and/or performing inspections in high volume/critical areas that have little or no tolerance for error. These positions require extensive training and a high skill level.

• Tier 5 This tier is limited to Machinists who are placed in a skilled trade category that reflects their higher skill level, additional education, and training. New machinists start at a base wage set for skilled trade with adjustments for geographic differences in pay and competition for qualified workers. Wage increases are received at 6 months, 1 year, and 2 years on the job.....

Questions:

1. How does Exactitude utilize intrinsic and extrinsic rewards to improve employee satisfaction and performance?

2. Explain the influence of external factors that are relevant for Exactitude to consider when establishing wages in the different manufacturing locations. What resources are available to determine the necessary adjustments?

3. How will the new compensation plan help align compensation with Exactitude’s strategic emphasis on quality and productivity? 

4. What would you suggest that HR do to address each of the employee concerns expressed in the case?

5. Explain which Job Evaluation Method seems to best describe the job tier system at Exactitude.

6. Research: Using online sources like the Bureau of Labor Statistics, Indeed, Payscale, Glassdoor or others, research wages for skilled manufacturing positions in your area. Compare them to another city or state. Explain any relevant external factors that may influence wages in your area. 

Transcribed Image Text:

Tier 1 2 3 5 Positions Production 1 Assembler 1 Inspector 1 Assembler 2 Inspector 2 Production 2 Trainer Machinists Salary Base wage Base wage + 0.25/hour Base wage + 0.50/hour Base wage + 0.75/hour Skilled trade wage