Management 623: Compensation

1
Management 623Compensation Performance
Management

• Session 17
• March 28th 2006
• Dr. J. Bruce Prince

2
Agenda

• Cover additional performance appraisal concepts
• Address final questions on the FastCat 2
  assignment requirement
• Rob Parson Case discussion
• Gather case critiques on this case
• Go Over Essay portion of the Mid-Term Exam

3
Coming Up

• Thursday, March 30th
• No Class Work on FastCat 2 Assignments
• Tuesday, April 4th
• FastCat 2 assignment is due
• Presentations on FastCat 2 for 2-3 teams
• Discuss Rob Parson B C case (handed out on
  3/28)
• I will provide handouts and reading list for the
  remainder of the semester on April 4th.

4
Mid-Term Exam Results

• Multiple choice
• Average 56/72 (78) Range 40 to 64/72
• Essay
• Average 113/128 (88) Range 90 to 128/128
• Overall 140 (70) to 191/200 (95.5)
• No adjustment will be made to this exam

5
FastCat Report 2

• See pages 37-58 for all details
• Page 53 - a good summary of write-up
• But the assignment sheet modifies this slightly
• Starting points
• Read pp. 37-58 match FastCat jobs to external
  market survey job descriptions pp.54-55
• Zip disk file must be used for market data
  analysis
• Should have time to play with data analysis
  package you are give a lot of flexibility and
  choices
• Must up-date pay objectives with decisions on
• Pay mix (benefits incentives base)
• Pay policy (lead, lag, meet market)
• Consider different structures for different job
  families

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FastCat 2 What is done with the data?

• Once you have the data what do you do
• Match FastCat jobs with database job descriptions
• Integrate with your internal structure (JE
  points)
• Reconcile internal vs. external mkt. conflicts
• Unique job structure may be strategic or
• But many say market is king you fight it lose
• Figure out which firms should be used dont use
  all!
• Adjustments to the market data
• Adjust for age get it up-to-data USE 5
• Check for anomalies and accuracy dont use
• Statistical analysis
• Distributional (mean variation)
• Weighted mean and quartiles
• Regression market pay line you will do this!

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The Results

• Develop a Pay Policy Line
• Adjusted from smoothed market line (pay
  objective)
• Pay mix policy - incentive vs. base
• Hi vs. lo benefits payer, etc.? (pay objective
  related)
• Pay ranges Min-max around mid-point
• Pay grades or bands
• Similar jobs into grades or bands
• Broad banding flexibility vs. control
• Dynamic markets cross-functional moves pay
  for skill performance within band

8
Rob Parson At Morgan Stanley case

• Should Rob Parsons be promoted or not?
• How should Paul Nasr approach conduct his
  performance discussion with Parsons?
• What goals should he have?
• Identify two key strategy suggestions
• so what actually happened?