Julia Flynn

Professor Poirier

2/5/18

1. Describe and assess, listing advantages and disadvantages of the direct compensation
system at 2G.

When Gillham first started 2G Robotics, he spent most of his time focusing on the technical

development and the constructing of the units. He then realized customer relations and

development is a key factor to focus on in order to have the employees at 2G Robotics give it all

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they got. A disadvantage of the direct compensation plan is that employees know that the only

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way to receive a raise in salary at the firm, is to go talk to Gillham one on one. Gillham is always

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very open about it and understanding. If he believes if the employee has been a key contribution
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to the company, then he is open to the request. If the raise in salary is more than the company can

afford, it would just mean that the company would be tight and may have to postpone additional
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purchases. Although Gillham is willing to sacrifice for the short-term to make his employees
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happy, I do not believe it is the best way to go about it. The strategy of case-by- case basis will

only keep the employees satisfied for so long. One of the advantages of 2G Robotics’
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compensation plan was the added dental and health benefits. Although Gillham was concerned

about his employees leaving him for a bigger company, he established such a strong company
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culture and community of people in the office that they are there for the long run.
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2. What are some of the non-financial rewards available to employees at 2G?

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It was clear that the people who joined the firm were motivated by something other than

financial compensation. One of the non-financial rewards was the firm’s culture. Gillham was

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 always concerned about keeping his employees happy and engaged. The work at the firm was

always interesting and his employees enjoyed learning something new every day. Gillham

wanted to make sure he talked with every employee on a regular basis. In order to make this

process a bit easier and organized, he started a ‘Walk the Block’ program. Everyday Gillham

would invite one employee to go for a walk around the block with him and gave the employees a

chance to say what was on their mind. Communication was a huge factor in the firm. Town hall

meetings were held each week and employees would update their co-workers on what they were

doing and if they needed anything.

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3. Should Gillham try to improve pay levels? Why or why not? If deciding to improve, how

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specifically should that be done?

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Although the employees at 2G Robotics are well engaged in the work they are doing, it will
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come the time when they realize their worth and potential at the firm. There are plenty of bigger
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firms out there that will pay these developers plenty more money. In order for Gilham to have
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any sort of competitive advantage with the bigger companies, he must make a change in his
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base-to base salary. This strategy will only keep the employees there for so long. I believe that
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Gillham should implement the idea his lawyer had suggested, an employee trust plan. I feel as
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though Gillham is focused too much on the short term goals, rather than long term.
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4. What are the benefits and disadvantages of instituting a stock option or employee trust
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plan (something that gives employees a stake in the organization)?

Instituting a stock option is a great way to create an additional employee benefit. Not only
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does it provide a great opportunity for financial rewards, but it increases the employees’ loyalty

to the firm and leads to improved performance. This will also be a great way to attract top talent,

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 and the trust plan will be a powerful tool to keep them apart of the firm. Another main benefit

would be tax advantage.

One major disadvantage of a stock option is the number of employees trying to exercise all

their options. This could decrease value in the firm as well as make for an unstable equity

structure.

5. Should Gillham institute an employee trust plan? If so, what restrictions should apply?

Yes, I believe he should. Instituting an employee trust plan has more benefits than

disadvantages. One important restriction that should apply are having employees be liable to pay

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some amount equal to their total earnings with wages, salaries, fees, etc.

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6. How should Gillham prepare for his meeting with Lin? Outline an agenda for that
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meeting.

After Lin visited his office, Gillham made it a point to sit down at his desk before going
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home and come up with a list of questions he wanted to ask Lin during the meeting. He knew
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this employee was a key contributor to the firm and did not want to risk losing him to a bigger

company who would easily take him in a heartbeat.

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Agenda:

I. Reason for raise

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a. Is pay the only issue?

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b. Are you looking for non-financial benefits?

c. intangibles
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II. Worth to the company

a. Discuss how Lin is a huge contributor to the firm

III. Offer

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 a. Listen for the reason of raise

b. Put a strong offer on the table

c. Offer benefits

IV. Stock option recommendation

a. Discuss any other concerns

b. Bring up employee trust plan

c. What is Lin’s opinion on suggestion

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