Bangladesh University of Professionals (BUP)

Faculty of Business Studies (FBS); MBA (Professional) Program

Course Title: Compensation management
Assignment alternative to final Exam (May-August-2020)

 Answer should be HAND WRITTEN/COMPOSED.

 After completing the exam please scan the script, convert it into PDF and send to the following e-
mail address (mrrubel1977@gmail.com).
 Submit the answer script between 10.0 pm to 11.0 pm on 03/09/2020.
 Please don’t submit before the given time frame. No script will be accepted after the given time.

Time 1 Hour Marks 30

 Answer FIVE QUESTIONS including question number 3 and 5.
 All questions carry equal marks (5 x 6)

1. The aim of compensation practices of the organization is to distribute the monetary and non-monetary
return for enhancing individual attachment. Do you agree with this statement? Justify with an example
from.

2. Sportsman Shoes has been a leader in the shoe industry for more than 30 years. Sportsman manufactures
and sells athletic shoes for all types of sports. The company has pursued a low-cost strategy in order to
sustain its success. It sells a limited number of shoe designs and has held costs low through
manufacturing efficiency and standardized operations. However, the past years have been a struggle at
Sportsman. The shoe market has seen a rise in the availability of low-cost imported shoes that has
threatened Sportsman’s competitive position. As a result, company executives have decided it is time
for a strategy shift.
Sportsman executives have done extensive market research and determined that many niche athletic
shoe markets exist where athletes are willing to pay more for shoes designed to meet the unique needs
of their sport. There are very few competitors in these niche athletic shoe markets, and most do not have
Sportsman’s past experience in keeping control of manufacturing costs. Sportsman has determined that
with talented shoe designers in place, they can manufacture athletic shoes to meet the needs of the niche
markets using their current manufacturing facilities and employees. By designing shoes that have
features that differ from competitors and meet the specific needs of a new group of customers, Sportsman
believes the company can create a competitive advantage. Further, while their shoes will not be as low
cost as they were in the past, they will likely be able to sell their shoes for less than market competitors
and still make a healthy profit.
Therefore, Sportsman has decided to shift from its current low-cost strategy to a differentiation strategy
and will begin production to make specialty athletic shoes. Sportsman must now make many tactical
 decisions in various functional areas of the company to support its decision to shift its overall business
strategy. Its first priority is to restructure the product development function. As it will need to understand
the needs of the niche markets and design shoes to meet those needs, it will need to hire and retain
talented shoe designers. The company will also need to hire operations specialists to transition its
manufacturing operations to produce the new shoe designs. Beyond hiring new staff, Sportsman also
must consider the implications for current employees to help them successfully transition to their new
work requirements. Therefore, there are several considerations the company must address in the area of
human resource management.
Questions:
I. Following Sportsman’s shift in competitive strategy, what are some considerations for the
company’s human resource management practices?
II. As a human resource practitioner, propose a holistic approach towards designing the
compensation and benefits program at Sportsman Shoes.
3. Structured compensation practices can help the organization to increase employee performance as well
as organizational performance. Justify the statement based on the following figure.

Salary

Reward and Employee

Incentives performance

Indirect
compensation

4. In COVID-19 pandemic situation organizations are reducing employee’s compensation to save costs.
Do you think that it is an effective strategy to maintain competitive advantage for RMG industry? Justify
your answer considering global competition.

5. Jack Hopson has been making wood furniture for more than 10 years. He recently joined Metropolitan
Furniture and has some ideas for Sally Boston, the company’s CEO. Jack likes working for Sally because
she is very open to employee suggestions and is serious about making the company a success.
Metropolitan is currently paying Jack a competitive hourly pay rate for him to build various designs of
 tables and chairs. However, Jack thinks that an incentive pay plan might convince him and his coworkers
to put forth more effort.
At Jack’s previous employer, a competing furniture maker, Jack was paid on a piece-rate pay plan. The
company paid Jack a designated payment for every chair or table that he completed. Jack felt this plan
provided him an incentive to work harder to build the furniture pieces. Sally likes Jack’s idea; however,
Sally is concerned about how such a plan would affect the employees’ need to work together as a team.
While the workers at Metropolitan build most furniture pieces individually, they often need to pitch in
and work as a team. Each worker receives individual assignments, but as a delivery date approaches for
a preordered furniture set due to a customer, the workers must help each other complete certain pieces of
the set to ensure on-time delivery. A reputation for on-time delivery differentiates Metropolitan from its
competitors. Several companies that compete against Metropolitan have a reputation of late deliveries,
which gives Metropolitan a competitive edge. Because their promise of on-time delivery is such a high
priority, Sally is concerned that a piece-rate pay plan may prevent employees from working together to
complete furniture sets.
Sally agrees with Jack that an incentive pay plan would help boost productivity, but she thinks that a team
based incentive pay plan may be a better approach. She has considered offering a team-based plan that
provides a bonus payment when each set of furniture is completed in time for scheduled delivery.
However, after hearing from Jack about the success of the piece-rate pay plan at his previous employer,
she is unsure of which path to take.
Questions
I. What are some advantages of offering a team-based incentive pay plan?
II. Which factors should Sally consider when designing an incentive pay plan? How would they
Influence the effectiveness of the plan?

6. You are a compensation analyst of a Ship Building organization of Bangladesh, which is located in
Khulna. Clarify the relevant labor market needs to analyze for determining the compensation practices of
your employees.