Acting as a recently hired compensation consultant, you will assist the burgeoning online music firm, e-sonic, to develop an internally consistent and market competitive compensation system which recognizes the achievements of individual contributors. A background and history of your new client in addition to a description of e-sonic business objectives are provided.

As a consultant, you will lay the foundation for an internally consistent compensation system by creating job descriptions and job structures, building a point evaluation method for comparing jobs, and assigning relative values to a sample of e-sonic positions.

Case scenario

Company Background Sonic Records is a market leading recording studio and production house. Sonic Records, having experienced tremendous success in the recording and music distribution industry over the past 30 years, realized that the rules of the game were changing. No longer would music be distributed solely through traditional channels. Consumers desired instant delivery of music online and expected a selection of thousands of artists work at their fingertips. A recent study of U.S. music listeners found that 87% of the U.S. population listens to music, spending more than 4 hours each day tuning into their favorite tunes. The demand for access to instant music access is widespread. According to the data, 85% of Americans listen to music online in a typical week, up nearly 15% from last year. Additionally, online listening trends are having a significant impact on our on-demand listening habits. While Americans streamed more than 145 billion on-demand tracks across audio and video platforms in 2014, they streamed 120 billion in the first half of 2015. Music listening is also becoming more mobile as 52% use their smartphones to listen to music in a typical week, a 9% increase over last year. The online music streaming market has seen rapid growth in the United States in subscription services; yet, there are many challenges that must be overcome to be successful. Success relies on many factors such as enforcing the rights of intellectual property. When consumers obtain digital music through online file sharing networks or burning CDs, it ultimately harms companies and the industry. In addition to this threat, a few competitors have already gained a foothold in this market space. These companies make up 70% of the market share in their industry and possess major strengths including their portfolios of millions of songs from some of the biggest labels in music, the ability to allow consumers to download songs onto their phones, and the affordable prices they offer for their services. Despite these challenges, opportunities exist for new entrants. The rise in technological advances such as the smartphone has led to a greater demand in online music, indicating potential growth. In addition, aside from the demand for online music in the United States, the UK, Japan, and Germany have the worlds largest recorded music markets. The digital music industrys expansion into international markets affords customers greater options and gives entrepreneurial companies the opportunity to reach out to a larger consumer market. In response, Sonic Records formed a subsidiary company named e-sonic. E-sonic would be responsible for creating an online music store capable of competing with established players in the industry. Key executives from Sonic Records were chosen to lead the new company. E-sonics mission was to create the worlds leading music distribution entity; ensuring Sonic Records prominence in the industrys future. Firm Objectives E-sonic is responsible for delivering quality online music. The music distribution strategy has transformed in the last 30 years from the delivery of a tangible product of records to a nontangible product of instant music downloads and streaming. E-Sonic falls within the national industry classification representing integrated record production and distribution. Backed financially by Sonic Records, a recording industry mogul, e-sonic possesses the resources and reputation necessary to build a world class company. The market recognized this. Just last month, e-sonic conducted a small, but very successful IPO. Although e-sonic had yet to even launch their online music store, the reputation of its parent company, Sonic Records, bolstered demand for the new issue. E-sonic founders decided the firm should retain ownership of the majority of the shares, which could later be used as incentives for employees crucial to the organizations long-term success. E-sonics key business objective, as dictated by its parent company Sonic Records, was to develop the worlds leading online distribution portal. Initially, e-sonics success would be measured by its ability to capture market share from competitors. These firms recognized the changing industry trends early and secured over 70% of annual download market share. E-sonic needed to target these current customers while attracting newcomers to the world of online music. Although the idea of offering digital music to millions of customers might initially seem complex, the formula for success in the industry has proven relatively simple. Superior marketing, a robust selection of artists, and a user-friendly Web interface helped current firms establish their market leadership. E-sonic executives, with decades of experience in the recording industry, held established relationships with all of the major record labels and most of the smaller ones, affording them an advantage in music offerings. However, as recording industry executives, e-sonics management had little experience in software development. Further, although marketing expertise was important for success in the traditional music industry, company management had no experience with online marketing or marketing initiatives tailored to their new, tech-savvy, customer base. Located in Los Angeles, e-sonic hoped to recruit the best and brightest of the music and software development industries. Further, they hoped to create a performance-based culture where employees felt rewarded for their contributions. Realizing the challenging task ahead of them, e-sonic executives had the foresight to recognize that despite their years of experience in the traditional recording business; outside consultants might offer them salient insights. Their new venture would require hiring employees in all business disciplines, especially those with the marketing and technical skills necessary to help establish esonic as the worlds preeminent online music source. In addition, e-sonic management understood well the importance of establishing a sound compensation system right from the firms inception. They knew that an internally equitable and market competitive compensation strategy could help e-sonic achieve their business objectives, but they had no expertise in this area. In response, the esonics management team has hired you as their compensation consulting staff. Congratulations and good luck with your new client!

Project Outline A. Create Job Descriptionsuse O*NET, provide job summaries and firm specific information to conduct job analysis and create job descriptions. B. Create Job Structuresdecide upon the most appropriate job structures for classifying company positions and place jobs within these structures. C. Build Point Evaluation Systemstudents follow detailed instructions provided in Chapter 6 of Strategic Compensation to construct their job evaluation system. 1. Select Benchmark Jobs 2. Choose Compensable Factors Based upon Benchmark Jobs 3. Define Factor Degree Statements 4. Determine Weights for Each Compensable Factor D. Calculate Point Values for Each Job 1. Determine Point Values for Each Compensable Factor 2. Use Point Evaluation Worksheet to Calculate Point Values for Each Position 3. Independently Rate Jobs 4. Resolve Any Discrepancies in Point Totals 5. Rank Jobs in Each Structure According to Their Values Determined by the Point Evaluation Method

Acting as a recently hired compensation consultant, you will assist the burgeoning online music firm, e-sonic, to develop an internally consistent and market competitive compensation system which recognizes the achievements of individual contributors. A background and history of your new client in addition to a description of e-sonic business objectives are provided.

As a consultant, you will lay the foundation for an internally consistent compensation system by creating job descriptions and job structures, building a point evaluation method for comparing jobs, and assigning relative values to a sample of e-sonic positions.