Question.2343 - Case Study 1 Pay Decisions at Performance Sports Katie Perkins’s career objective while attending Rockford State College was to obtain a degree in small business management and to start her own business after graduation. Her ultimate desire was to combine her love of sports and a strong interest in marketing to start a mail-order golf equipment business aimed specifically at beginning golfers. After extensive development of a strategic business plan and a loan in the amount of $75,000 from the Small Business Administration, Performance Sports was begun. Based on a marketing plan that stressed fast delivery, error-free customer service, and large discount pricing, Performance Sports grew rapidly. At present the company employs 16 people: 8 customer service representatives earning between $11.25 and $13.50 per hour; 4 shipping and receiving associates paid between $8.50 and $9.50 per hour; 2 clerical employees each earning $8.25 per hour; an assistant manager earning $15.25 per hour; and a general manager with a wage of $16.75 per hour; an assistant manager earning $15.25 per hour; and a general manager with a wage of $16.75 per hour. Both the manager and assistant manager are former customer service representatives. Perkins intends to create a new managerial position, purchasing agent, to handle the complex duties of purchasing golf equipment from the company’s numerous equipment manufacturers. Also, the mail-order catalog will be expanded to handle a complete line of tennis equipment. Since the position of purchasing agent is new, Perkins is not sure how much to pay this person. She wants to employ an individual with 5 to 8 years of experience in sports equipment purchasing. While attending an equipment manufacturers’ convention in Las Vegas, Nevada, Perkins learns that a competitor, East Valley Sports, pays its customer service representatives on a pay-for- performance basis. Intrigued by this compensation philosophy, Perkins asks her assistant Book Title: eTextbook: Managing Human Resources Chapter 9. Managing Compensation Case Study 1 manager, George Balkin, to research the pros and cons of this payment strategy. This request has become a priority because only last week two customer service representatives expressed dissatisfaction with their hourly wage. Both complained that they felt underpaid relative to the large amount of sales revenue each generates for the company. Questions 1. What factors should Perkins and Balkin consider when setting the wage for the purchasing agent position? What resources are available for them to consult when establishing this wage? 2. Suggest advantages and disadvantages of a pay-for-performance policy for Performance Sports. 3. Suggest a new payment plan for the customer service representatives.
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CASE STUDY 1 1. What factors should Perkins and Balkin consider when setting the wage for the purchasing agent position? What resources are available for them to consult when establishing this wage? When setting the wage for the purchasing agent position, Perkins and Balkin should consider several factors. Firstly, they need to determine the market rate for similar positions in the industry, particularly for individuals with 5 to 8 years of experience in sports equipment purchasing. Consulting salary surveys and industry benchmarks can provide valuable insights in this regard. Additionally, they should consider the complexity and responsibilities of the role, the specific skills and qualifications required, and the purchasing agent's potential impact on the company's overall performance and profitability. Finally, internal equity should be taken into account to ensure that the wage aligns with the company's existing compensation structure and is fair in comparison to other managerial positions within Performance Sports (Snell &Morris, 2018). 2. Suggest the advantages and disadvantages of a pay-for-performance policy for Performance Sports. Pay-for-performance policy can offer advantages and disadvantages for Performance Sports. Advantages include increased motivation and productivity among employees, as they are incentivized to perform better to earn higher pay. This can lead to improved individual and team performance, increased sales, and better customer service (Hamel, et al., 2014). On the other hand, disadvantages include potential resentment among employees who feel they have less control over their earnings, and the risk of employees prioritizing short-term gains over long-term strategic objectives. It may also be challenging to design fair and transparent performance metrics that accurately measure an employee's contribution to the company's success (Hamel, et al., 2014). 3. Suggest a new payment plan for the customer service representatives. For customer service representatives, a pay plan that combines a base hourly rate with performance-based incentives could be effective (Snell &Morris, 2018). The base rate ensures a stable income, while performance incentives provide additional rewards for exceeding targets and delivering exceptional customer service. The performance metrics should be aligned with the company's goals, such as sales revenue, customer satisfaction ratings, and error-free order processing. This approach can motivate employees to excel in their roles and contribute to the company's success while retaining some stability in their earnings. References Hamel, M. B., Roland, M., & Campbell, S. (2014). Successes and failures of pay for performance in the United Kingdom. The New England journal of medicine, 370(20), 1944. Snell, S., Morris, S. (2018). Managing Human Resources. United States: Cengage Learning.More Articles From Human Resource
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