CASE SUMMARY

2G Robotics is a small company that designs and manufactures underwater laser scanning
systems. The company is doing well, but the owner, John Gillham, is concerned about the
company's compensation plan. He is worried that the plan is not competitive enough to attract
and retain top talent.Gilham's current compensation plan is based on a base salary plus a
bonus. The base salary is determined by the employee's job title and experience. The bonus is
based on the company's profits. Gillham believes that the bonus is not enough of an incentive
for employees to work hard.

Gilham is also considering implementing an employee trust. An employee trust is a type of

deferred compensation plan that allows employees to share in the company's profits. Gillham
believes that an employee trust would be a good way to reward employees for their hard work
and to help them save for retirement.

Gilham is not sure what changes he should make to the company's compensation plan. He
needs to consider the company's goals, the needs of its employees, and the competitive
landscape.

Designing the Compensation Plan

Step 1: Company Goals and Values: 2G Robotics' compensation plan should reflect its
commitment to innovation, collaboration, and long-term growth. The plan should emphasize
both individual and team contributions to drive innovation and create a culture of excellence.

Step 2: Job Analysis and Evaluation:Conduct a detailed job analysis to understand the
specific roles within the company. Categorize roles based on their technical complexity,
responsibility, and impact on the company's success.

Step 3: Market Research: Research industry benchmarks and competitor compensation

packages for similar roles. Take into account salary ranges, bonuses, equity offerings, and
other benefits.

Step 4: Base Salary & Variable Pay/Bonus Structure: Establish competitive base salaries
based on the job analysis and market research. Consider differentiating salaries based on skill
level, experience, and job complexity. Design a variable pay structure that rewards
performance and contributions.
Step 6: Equity and Stock Options: Offer stock options to key employees, especially those
who play a critical role in driving innovation and strategic growth. This aligns their interests
with the long-term success of the company.

Step 7: Flexible Benefits and Perks: Incorporate benefits such as health insurance,
retirement plans, professional development opportunities, and flexible work arrangements.

Step 8: Communication and Transparency: Clearly communicate the compensation plan to

employees, highlighting how their contributions directly impact the company's success.
Provide regular updates on company performance and milestones.

Step 9: Long-Term Incentives: Consider introducing long-term incentives such as vesting

stock options that reward employees for their sustained contributions and commitment to the
company's growth.

Step 14: Regular Communication: Foster open lines of communication with employees
regarding their compensation, career growth, and the company's vision. This helps build trust
and alignment.

Suggestions

 Gillham should consider using a pay-for-performance system. This type of system

rewards employees for their individual and team contributions. It can be a good way
to motivate employees and improve productivity.
 Gillham should also consider offering employees more benefits, such as health
insurance, retirement savings plans, and paid time off. These benefits can be a
valuable part of an employee's compensation package.
 Gillham should make sure that the compensation plan is fair and equitable. All
employees should be paid fairly for their work, regardless of their gender, race, or
ethnicity.
 Gillham should regularly review the compensation plan to make sure that it is still
meeting the needs of the company and its employees. The compensation plan should
be a living document that is updated as needed.