Establishing Strategic Pay

Name: Nemal Farhat Reg No:41690

Course: BBA-H Day/ Timing: Monday 6:30 to 9:30
Submitted To: Dr.Kashif Mehmood
Date: 13-April-2020

Plans Case Study: CARTER CLEANING COMPANY

Question 1. Is the company at the point where it should be setting up a formal

salary structure based on a complete job evaluation? Why?
Yes, by setting up a formal salary structure is being fair to the employees because the salary
being paid based on the job task rather than pay the salary based on gender. When the salary
structure being fair, it leads satisfaction among the employees and as a result the turnover will be
at low rate. Besides, the company also can control their financial operation by doing budget
allocation planning for their business operation.

Moreover, the formal salary structure will make the employees clear on the amount pay for his or
her job position. Thus, it can make easier to the related manager to do a process of salary
payment.

Question 2. Is Jack Carter’s policy of paying 10% more than the prevailing
rates a sound one, and how could that be determined?
First of all, First of all, according to this case, carter does not make any formal surveys, it is a
correct action for Carter.

Carter should pay more attention to the requirements of employees for building a formal pay
policy. Secondly, Carter Company should pay different salaries for different job department
rather than gender. Thirdly, it can determine a job’s relative worth by job evaluation. However,
Jake has no enough evidence for building a pay policy. In our opinion, Carter may choose a job
evaluation commitment to ensure right pay policies.

As far as we concerned, Jake Carter’s policy of paying 10% more than the prevailing rates is
sensible. There are five steps for making a rational pay plan. Primarily, employer conducts
informal salary survey and formal survey. Then employers use salary survey to know what
others are paying. Secondly, Carter chooses job evaluation methods to determine the worth of
one job. Thirdly, the company pays the similar salary for similar jobs. Fourthly, Carter can use a
wage curve to help assign pay rates to each job. Then it is easy to price jobs with a wage curve.
Lastly, we know Carter does not develop pay ranges. Therefore, it is important for developing
pay ranges to motivate high performance employees.
At the same time, Carter needs to correct out-of line rates. In this case, we disagree that men and
women have different salary, it is unfair. Thus, Carter must ensure that men and women are paid
comparably for essentially the same work. Jack Carter’s policy of paying 10% more than the
prevailing rates a sound one because he believes that within the higher payment he could reduce
the turnover among the employee and also at the same time can fostering the employee loyalty to
organization. It could be determined by providing facts that Jack pays the 10% more to the
worker. Besides, it’s very much better, if the payment done to the workers that are showing the
loyalty to the organization.

Question 3. Similarly, is Carter’s male-female differential wise? If not, why

not?
Our opinion, the answer is no, Carter’s shop does not have male-female differential wise. And
they are also equal to their employees. Because Carter Cleaning Centers do not make a formal
and legal wage structure to their employees, and at the same time Carte Cleaning Centers also
does not use a good compensable factors to their employees, it will cause some bad effects to
their employees and it also bring about different treatment. Wages rates are based mostly on
those prevailing in the surrounding community. According to the Equal Pay Act of 1963, it
requires that men and women who do the same job in the same organization should receive the
same pay.

The term `same pay` refer to no difference is acceptable. In addition the law, also defines that
one consider as doing the same level of job if they are equal in term of skills, effort,
responsibility and working condition. However, the Equal Pay Act of 1963 includes four
exceptions that allow employers to pay another gender more than another. Some of those
exceptions are like more seniority, better job performance, greater quantity or quality of
production and lastly certain other factors like paying extra to employees that working the night
shift.

Back to this case study, there is no such exceptions includes in the reason provided by the Jack
as to justify why he decided to pay 20% more than woman to men workers. The reason provided
by him is they are stronger and can work hard for longer hours and also they all have family to
support. This justification is the one that can’t be acceptable at all if refer to the law and it also
show discrimination towards the female worker. This is because, according to Equal Pay Act
1963, rather than the four exceptions as mention above, female and male workers should receive
the same amount of payment if they hold the same job that are substantially equal.

In addition, this unwise decision of Jack Carter’s policy will result in many negative effects such
as increase in turnover among female worker, job dissatisfaction. Besides, there will be also
more arguments in order to get an equal pay rate and lastly it will lead to an unproductively
result to the organization.

Question 4: Specifically, what would you suggest Jennifer do now with respect
to her company’s pay plan?
For the development of the company, there are several suggestions from us to Jennifer do now
with respect to her company’s pay plan. More details about the suggestion will be discussed in
the following paragraph.

First, in the question 1, we had mentioned this point, setting up a formal salary structure. Based
on this point, for the employees, they will feel more fair and unambiguous about how much they
can get and it also makes the managing easier and more clearly for managers, there are strict
certain structure to avoid the unfair things happen.

Second, make a necessary formal survey in order to determining the amount that company
should pay at what type of job responsibilities in order to avoid the mistake such as imbalances
of salary payment. No matter what careful we are, we also would make some errors, so recheck
the results are very necessary and important. In the case, the company conducts informal surveys
among friends and cleaners trade associates. By doing this, it would reduce the cost and it is
good for getting vast and direct information. But the independent information source could give
great risks to the company in the future. Therefore a formal survey to the employees is more
effective rather than informal survey in order to get feedbacks from employees regarding the pay
system.

Third, about the policy of paying 10% more than the prevailing rates, as a company, profit is the
first thing. Although, this policy can foster employee loyalty, but to the long-term, the employees
will accustom this situation and cannot motivated them to do better. Changing the policy like
rewarding the outstanding employees with this policy, not all, this not only can reduce the cost,
but also can motivate employees to get the higher prevailing rates.

Fourth, abolish the policy of paying men about 20% more than women for the same job.
Although her father’s explained that men are stronger and can work harder for longer hours, and
besides they all have families to support, this policy considered bias to the men employees and of
course it can course dissatisfaction to the women employees and they will feel unfairly treated.
In pay system, it is better to have an official approved procedure on determining the right
employees who’s qualify to be rewarded on the bonuses or salary increment and it should be
based on the employees work performance. Don’t do like that, regarding somebody who work
hard and better is effective method.