1)Describe and assess (advantages and disadvantages) the direct compensation/pay system

at 2G Robotics.

Students shulod explain that the compensation system of an organization includes anything that an
employee may value, and desire and that the employer is willing and able to offer in exchange. This
includes:

(1)compensation components—Basic pay, Allowances, variable pay

(2)Benefits: Health care, Retirement Insurance, Time off

(3)Recognition: formal employee recognition, schemes and rewards and informal recognition

(4)Development: Learning Career opportunities, Promotions and Job Growth

(5)Well Being: Flexible work opportunities, well being culture and values.

Advantages:

•The system is flexible and can be customized to fit each unique employee situation. This is
echoed in the discussion between Lin and Barber when Barber remarks that “everyone knows that’s
what you have to do to get a raise around here” when commenting on Lin approaching Gillham for a
pay increase.

•The process for determining compensation does not require a great amount of organizational
resources (e.g., no need for a compensation specialist role to be hired [or developed] or for the
company to contract external compensation consultants in order to advise the company) since
Gillham makes these decisions independently and on a case-by-case basis.

•The process is simple to implement and understand (especially compared with more
complicated systems, such as pay-for-knowledge systems or systems with multiple performance-
and output-related factors).

•The salary part of compensation is guaranteed pay for employees as opposed to

performance- based pay; this current system may help with reducing uncertainty perceptions
amongst employees when it comes to their earnings and may also help with reducing intentions to
leave the company.

•Employees do not seem to be dissatisfied with the process or outcomes as, again, Barber
mentions that he has not “heard of anyone leaving here recently because of the money” and Barber
also remarks that “Gillham is fair”.

Disadvantages:

•The system may lead to internal inequity due to its unsystematic nature and the potential for
biases to impact compensation-related decisions. Fairness perceptions are important since
turnover appears to increase when employees do not perceive fairness in reward allocation

•An unstructured system is more susceptible to litigation from employees who feel unfairly treated,
and it is less defensible in court.(discrimination issues)
•The employer is committed to paying this compensation regardless of how poorly the organization
might be doing (i.e., it is not a self-sustaining system, such as profit-sharing, where employees only
receive profits when employer profits are at a predetermined level).*

•The system is unresponsive to the external market, and employee retention may be affected

2)What are some of the non-financial rewards that are available to the employees who work at
this company?

Although the organization has a modest benefit plan and wages that are lower than other
companies, there are other considerations in the overall reward picture. Money (or salary) is direct
financial compensation and benefits are part of the indirect financial compensation offered to
employees. However, financial outcomes are not everything. While traditionally, employers and
employees would tend to focus on finances, that perspective is missing a big part of the picture.
Opportunities and working conditions and the behavior of employees is important to design a
system that considers each of these major components and how they work together. Values like :

1) Recognition: formal employee recognition, schemes and rewards and informal recognition

2)Development: Learning Career opportunities, Promotions and Job Growth

3)Well Being: Flexible work opportunities, well being culture and values.

4) Working environment: Culture,Flat structure,People treated as equals,Approachable leader

Open communication

3)Should Gillham try to improve pay levels? Why or why not and in what ways (e.g.,
indirect/non- financial components)?

Students should talk about compensation philosophy.

Questions to answer the below issues:

1-What is Business Strategy

2-People Strategy

3-Stakeholder Strategy

Students should mention if Gillham goes so far as to make 2G Robotics a compensation leader,
match or lag .then there are also potential problems with that route. Organizations that pay better
than other companies may suffer from turnover rates that are too low. Dissatisfied employees who
should leave the organization do not do so because it is difficult to take a pay cut when changing
jobs .Alternately, Gillham may decide to be a market leader with only key positions (e.g., developers
like Lin) that are in high demand and are of the utmost importance to the organization’s success. If
he does this, then he may improve perceptions of external equity for people in those positions.
However, other employees in the organization then may have lowered perceptions of internal
equity. each compensation decision can potentially impact equity/justice perceptions of every
employee in the organization.(fairness)
4)What are the benefits and dangers of implementing a program like a stock option plan or an
employee trust (i.e., something that gives employees a stake in the company)?

Benefits:

• Stock option plans can motivate employees when they are up-to-date on how the
business is doing and if they feel that they can influence outcomes

•Recruiting may be easier as this is a benefit that may not be offered by other organizations.
pay level positively influences organizational attractiveness/reputation as well as the
willingness of job applicants to apply for a job with an organization (

•Employee retention may be increased if employees determine that they have to remain with
the company to obtain a substantial payout; however, this option may engender continuance
commitment

•The equitable nature of the trust may contribute to a positive organizational culture and
increased affective commitment

•The organization will be able to offer a benefit that does not impact current cash flow levels

Dangers:

Defining the group or work unit to be included in the plan

Establishing the bonus formula

Defining the baseline against which to measure improvement

Deciding on the share between the company and the employees

Deciding on the split among employees

Deciding on the frequency of payout

Developing procedures for communicating results

Deciding whether and how to incorporate employee participation