Running head: Case Study
Your Turn: Sled Dog Software
Answer 1: Before determining any pay policy for a company like Sled Dog it is important to understand the location of Sled Dog that is where company is planning to hire new recruits, which is Larmie, Wyoming. There are various factors which has to be kept in mind such as cost of living ,number of graduate schools in surrounding areas from where graduates can be recruited , number of software companies and their pay rates in that area, and last but not the least availability of experienced professionals in the surrounding areas. Once all the mentioned factors are determined, company can decide its own pay strategy. My recommendation would be that, the pay structure should be more market driven rather than product driven. The pros of this approach will be minor haggling which will end up as best deal between employer and employee. Cons of this kind of policy options is that many times it has been observed that the employer tries to take advantage of the situation by bargaining on salary amount. I would further suggest that the initial base pay should be around 67% and remaining percentage of the compensation should be of other components such as benefits, options, bonus like in exhibit 7.4 where company C follows this pay mix as part of their compensation structure.
Answer 2: As per the Economic Research Institute (www.erieri.com) the average salary of a marketing manager is $ 97,081 in Wyoming for year 2013. Now several assumptions I am keeping in consideration, since Sled Dog Software is about to venture in the market, so company might not be in a position to offer the existing market rate to the new hire. I would suggest a starting salary of $70000 K for this position with additional components like 30% bonus in first year upon the target achievement and from second year I would recommend that company should offer an incentive plan of $800 per month on the basis of the employee’s performances. This performance driven compensation plan will motivate the employee to perform better and as a result will also attract qualified candidates, since the earning has no limit as this pay mix is blend of performance as well as market driven pay plan.
Answer 3. I have recommended that Sled Dog Software should pay the base pay below the market level, but on the other hand I have made suggestions that other components like bonuses and incentives should also be the part of compensation, this strategy will help in attracting large number of talent to apply for job in Sled Dog Software. So this policy is part of Signaling theory, on the basis of which I have designed the pay mix for Sled Dog Software.
Answer 4. The additional information, which I will need before I can recommend any Compensation package to the employees of Sled Dog Software are as follows. A). I need to know the compensation budget of Sled Dog Software for their employees. B). I need information regarding the existing employees, that is number of department, number of employees in the entire job family. C).I also need information regarding the detail pay structure, or salary distribution for other employees.
Answer 5. I will have to explore the product in detail before taking any decision .If the project deals with secured data and other personal information related to the client such as SSN number or Credit card information. Then I would have to allocate all the development team physically in Laramie as it will be a highly secured product. Else I can compare the labor exchange value, and if from the cost point of view I am getting cheaper labor in offshore than I will send some part of the development to offshore in order to derive cost advantage.
