Research & Analysis 4

Assignment: Pay for Performance

Overview: RA 4 builds on your chapter readings on performance evaluation, managing compensation, and pay for performance.

A worksheet has been prepared for you listing your 12 employees, their current salaries and their annual performance ratings which you have determined. The current salary range for a Payroll Clerk 1 at the firm, Delta Business Services (a fictional company), is:

Minimum $12.42/hr $25,833/annual

Midpoint $14.90/hr $31,000/annual

Maximum $17.39/hr $36,166/annual

The salary range for the Payroll Clerk I at Delta Business Services is competitive with the market, as a local survey reports an average median of $27,200 - $34,900 for this position.

As the Supervisor of this payroll unit, you have been given the task of recommending annual merit increases for your subordinates. Last month you completed annual performance discussions with each member of your unit. This month you are tasked with determining how best to distribute the merit budget, and prepare salary discussions for each of your employees.

You have been provided a 3% merit budget to award your team as you see fit. You have similarly been provided a graph illustrating performance vs. pay for your 12 employees. The graph notes how each employees performance compares to the salary range. This illustration should be helpful in your understanding of how performance for each your employees compares to the pay they are currently receiving. This should be helpful in making award decisions. Consider presenting your work using the Excel worksheet provided. Insert new columns and/or rows as needed. Submit your work via the Assignments link in Bb.

Assignment requirements:

Number each submission or a deduction will be taken:

Note this is a pay for performance assignment - Compa Ratio is not a consideration at all! Warning - use of compa ratio as a merit increase will be given a zero on this assignment.

1. (5 points) Calculate the 3% merit budget (merit pool is determined by computing 3% of the total salary of your team).

2. (40 points) Determine how best to distribute the merit pool based on the principle of pay for performance. Merit increases should be expressed both in dollars and as a percent of the employees current base pay. NOTE: You should base your pay decisions on employee merit. Employees meeting standard should receive a merit increase. Those not meeting standards should not receive a merit increase and should be placed on an employee improvement plan.

3. (15 points) Compute the new salary (merit increase + current salary). Show the percent given & new Salary. Include each employee's full name, what their previous salary was and what the new salary is expressed in both dollars and a percentage. Note: Do not go over your budget and do not leave money on the table. Use the full amount given to distribute. A few dollars off is fine, however, you should give as close to the entire amount as possible as your employees should receive the total you are given to spend on "merit" increases.

4. (40 Points) Prepare a statement for each of the 12 employees that affirms your decision to make the performance/award decision. This is a statement of at least a paragraph for each employee that you would address to the employee during the meeting to discuss their new salary/wage. Your message must reference data from the performance evaluation to include their performance rating and how much, if any, they will receive. The crucial point in any performance evaluation is the discussion with the employee. The employee statements in the assignment should address the decision rationale to each employee. In-depth statements will help the employee understand strengths and need of improvement areas. The employee and the supervisor can then develop action plans to improve performance. For below average or marginal employees, these discussions can lay the groundwork for either performance improvement or termination. Did you discuss what action will be taken for a below average employee?