TanTinTun & Associates is a medium-size marketing organization specializing in professionalpromotion and publicity services. The firm's top management believes that it provides qualityservice as evidenced by the high level of customer satisfaction. The organization consists ofthree departments: print media, audio media, and visual media, each of which has a seniordirector in charge. The company employs 80 clerical staff who are paid on an hourly basis and30 professional staff who are salaried. A large majority of the employees have an excellentrating in their job skills, and all employees demonstrate above average performance in their jobresponsibilities. The employees take pride in their achievements, and morale is very good.Salary ranges are established for different job classifications within the clerical staff (i.e.,clerk, clerk typist, secretary, and administrative assistant) and the professional staff (i.e.,analyst, manager, and director). A fixed-rate structure is used for all salaries. The companyoffers no commissions because it does not want its professional staff applying undue salespressure on its customers. Company management is proud that it does not have to resort to asalary plus commission structure for its professionals to generate sales.
Employees are recognized for superior performances through salary increases andpromotions. Management believes that salary increases should be based on merit, and open
positions are filled from within whenever possible. Top management contends that highly skilledand motivated employees will improve productivity it they are rewarded with annual merit payraises and if promotions are based on performance.Top management announced in November that the amount available for pay increaseswould be 10 percent of the actual total salary expenditures for 2019. All salary increases wouldbe effective January 1, 2020.The print media department consists of 20 clerical and eight professional employees onJanuary 1, 2019. Six clerical employees were added during the year at the rate of about oneevery two months. Two professionals were added, one on March 1 and one on August 1. Three employees were promoted during the year: two secretaries to administrative assistants and onemanager to director. The total actual salary expense for the department without regard foremployee benefits and employer tax contributions was RM548,000. Therefore, the total amountallocated for wage increases for the print media department in 2020 is designated to beRM54,800.
Shortly after the merit pay program was announced, the print media departmentemployees received their year-end evaluation conducted by the employee's supervisor. Thesenior director met with each supervisor and received all performance reports and thenannounced the merit pay increase for each employee.Upon completion of this entire process, several employees complained individually aboutthe inequities of the merit pay program. The senior director was concerned about the employeediscontent because the people complaining were some of the highest achievers on the staff.They tended to be at the lower classification levels and were relatively new employees, havingbeen with the company form one to two years. The individuals showed potential and were highlymotivated, often working extra hours and assuming additional responsibilities.
The new employees' behavior differed slightly from the employees who had been withthe department for a longer period of time. Although highly skilled and competent in their jobs,the veteran employees tended to be reluctant to accept additional responsibility or to work extrahours on a regular basis.
Required

1). Review TanTinTun and Associates' wage and compensation plan.
a. Identify and discuss its general strengths
b. Identify and explain the shortcomings in the administration of the merit pay increasesthat are to become effective in 2020, and discuss what effect these shortcomingscould have on the group of discontented employees in the print mediadepartment.

2). Explain how this compensation program should be revised, if at all.