Observation

Students will be assigned into small groups for a semester project in the role of consulting teams. Team will review performance and salary data provided to demonstrate a pay-for-performance strategy in decision making, budgeting, and administering merit increase distribution to a work unit. The deliverable is a written paper in APA format capturing assignment requirements.

Overview: The semester Team Project builds on your chapter readings on performance evaluation, managing compensation, and pay for performance.

A worksheet has been prepared for you listing your 12 employees, their current salaries and their annual performance ratings which you have determined. The current salary range for a Sales Associate for a sporting goods store is:

· Minimum $15.00/hr $31,200/annual

· Midpoint $22.50/hr $46,800/annual

· Maximum $30.00/hr $62,400/annual

As the Store Manager, you have been given the task of recommending annual merit increases for your subordinates. Last month you completed annual performance discussions with each member of your unit. This month you are tasked with determining how best to distribute the merit budget and prepare salary discussions for each of your employees. You have been provided a 3% merit budget to award your team as you see fit.

Assignment requirements: Using the data provided --

1. ✅Compute each employee’s compa-ratio (current salary divided by the midpoint). This value represents the relative position of the employee’s current salary to the market (low, equal, high) and can be useful in making award decisions.

2. ✅Prepare a line graph chart reflecting the salary & performance rating for assigned employees.

1. Salary on vertical

2. Performance on horizontal

3. Summarize your observations using the results from #1 and #2 to characterize salary considerations you will need to factor in making salary decisions for each employee.

a. What is your graph telling where they fit on the pay line and how is that related to their performance? Pay does not reflect performance.

b. Comparing their current rate versus their performance rating (pay for performance) Some employees have a poor rating but are being paid almost the same as others who perform better. Example: Christine Elsbery had a average score of a 3 and makes more than anyone

4. ✅Calculate the 3% merit budget (merit pool is determined by computing 3% of the total salary of your team). $12,433.20

a. Add everyone’s salaries together and multiply by .03

5. ✅Determine how best to distribute the merit pool based on the principle of “pay for performance”. Merit increases should be expressed both in dollars and as a percent of the employee’s current base pay.

Everyone over an average score of 4 will get a pay increase of 5% raise

Everyone with an average score between 3.50 and 3.99 will get a pay increase of 3% raise or higher

Everyone with an average score between 3.0 and 3.49 will get a pay increase of 2%

Anyone below an average score of 3 will be placed on probation within 6 months to improve their performance while attending training courses and having consistent feedback from their managers. (meetings)

6. ✅Compute the new salary total from sheet 3 in the spreadsheet (merit increase + current salary) and explain how we calculated them, including an image of the chart

7. ✅Compute the participation rate for the department (# of employees receiving merit increases divided by the total # of employees in the department). This value represents the % of employees in the department receiving an increase. Too high a percent infers that there is little performance/reward differentiation; too low a percent infers possibly an unrealistic performance/reward threshold. Both ends of the participation rate continuum could affect morale, performance, and result in turnover.

a. tells how many employees got a raise (did you discriminate?)

b. if too few people got a raise, can create a moral problem 70% sweet spot

8. Prepare a statement for each of the 12 employees. Your statements should be individualized messages that reference data from the performance evaluation. Your statements should provide the basis for your performance/reward decision. You must identify performance to sustain and improve. Should you award a merit increase, you should indicate the amount of the increase as a percentage of increase from the old salary to the new salary, and the value in dollars (per hour or annually). Should you determine not to award an increase, you must identify the basis of that decision and provide a period for re-evaluation and re-consideration of a merit increase.

a. Example: Because of your performance in (these factors )you will be earning an X% bonus, which equals $XX. Some areas that can be improved on include…

The Team Project will be scored to contribute 30% to the student’s final grade (equal to a maximum of 30 points). Team Project scores will be reported on MyGrades. Assignment instructions and supporting materials will be posted under the Blackboard Course content link. All work should be submitted through the respective active Course content link.

Everyone will be responsible for 2 reviews

Alejandra	1. Chaney, Ronald (total appraisal 3.8) 2. Soto, Sandra (total appraisal 3.6)
Cassidy	1. Clinton, Marilyn (total appraisal 3.8) 2. Perry, Rhonda (total appraisal 3.5)
David	1. Bush, Gary (total appraisal 3.7) 2. Blanco, Maria (total appraisal 2.7)
Shawn	1. Porter, Henry (total appraisal 3.4) 2. Gibson, Christine (total appraisal 3.6)
Heather	1. Ahmed, Janel (total appraisal 3.8) 2. Lozano, Tina (total appraisal 4.3)

Example: Elsbery, Christine average score = 3, raise= 2%

Christine, you received a score of 3 for all areas. Your performance leads you to meet the minimum of performance standards. As a management team, we feel that you have the potential to improve and move out of the bottom quartile of performance standards. If you fall below the 3.0 minimum standard, it will place you in a position of seeing negative consequences. To avoid this, we recommend that you pursue improving your performance in teamwork, customer service, and taking initiative as a starting point. You will be receiving a 2% bonus, raising your annual salary from $38,480.00 to $39,249.60. We have faith that you can make major improvements to once again be one of our top performers that paced you in the top salary bracket, to begin with. You have been with the organization longer than most of your current team members, and you have incredible experience and knowledge that you can apply to your role. We will be continuously working with you, providing feedback in the hope to help you meet your fullest potential and better rewards in the future.

Example: Linares, Patricia average score = 3.2, raise= 2%

Patricia, in teamwork you received a score of 3.5, and in demonstrating your knowledge you received a score of 3.5 as well, meaning that you are doing a little more than simply meeting expectations. You received a 3 in taking initiative, producing good quality products, producing a reasonable quantity, and in customer service. Though these areas meet the department standards, we believe you have the ability to improve your scores in these areas. With some effort, you could bump up to the next performance level for your next annual review. Your overall average score was 3.2, putting you in the 3.0-3.49 performance bracket. Which entitles you to a 2% pay increase in your annual salary, raising you from $37,440.00 to $38,188.80 annually. In an effort to be transparent, as your approach your salary midpoint your annual increases will begin to reduce in size if your performance does not begin to improve in the areas we have discussed. We will be providing you with continuous feedback in an effort to communicate our expectations fully. We know you have the ability to be a key player in us reaching our goals as an organization, which is why we will be investing in your development and helping you reach your individual goals.

Alejandra Martinez

1. Chaney, Ronald - average = 3.8, raise = 3%

Ronald, we appreciate your performance and would love to speak with you about how well you have performed in this past year. After reviewing your performance we noticed that out of six performance characteristics you performed with an outstanding number of 4 in the initiative, quality, quantity, and customer service. While you have been showing outstanding results, we do recommend working on your knowledge and teamwork as you have scored a 3 and 3.5. We know and believe that you are an outstanding performer and would love to see you grow and gain more knowledge and be able to grow within your team. As one of our top performers, we would like to congratulate you on a 3% raise which will increase your salary from $31,720 to $33,207.20. We congratulate you on this great performance and we hope to see you grow even more this upcoming year.

2. Soto, Sandra - average = 3.6, raise = 3%

Sandra, after going through your performance report we definitely see some outstanding performance in certain characteristics as well as areas to improve on. On six of the characteristics that we measured your performance on, you gave us an outstanding number of a 4 in teamwork and quality. You have also met the standards and scored a 3 in initiative and a 3.5 in performance for knowledge, quantity, and customer service. Even though you have met the standards that we are looking for, we would love to see you improve on your initiative skills as well as your knowledge, quantity, and customer service. At the end of the day, you did score an average of 3.6 in which we congratulate you with a salary increase of 3%. Your annual salary has gone from $32,240 to $35,885.20. We want to thank you again for your hard work and hope to see you grow even more next year.

Cassidy

1. Clinton, Marilyn average = 2.8 , raise = 0%

Dear Marilyn, We have been conducting a performance report to help indicate what employees are meeting the company's standards. When looking at your report, we can see that you maintained a fairly average level of performance. Out of the six performance characteristics being reviewed, you received a 3 in five sections. The main area that you seem to be struggling with would be teamwork. In this section, you received a review score of 2. Our minimum performance bracket only qualifies for personnel who have earned a score of 3.0 or higher to receive a salary increase. For this reason, you will not be receiving a pay increase. Though this was a difficult decision to make, we always encourage those who do not qualify for this salary increase to improve on the areas that they struggle with. Our recommendation is that you work on teamwork and one other area that you scored a three in, then your performance will be re-evaluated in 6 months to determine our next steps. This will help ensure that you will have a greater chance of receiving a pay increase in the next annual review. Your overall appraisal score was a 2.8 placing you under the minimum bracket. This means your salary will remain at $33,280 annually. You will also be required to take additional training courses to help you improve on the areas that you struggle with.

2. Perry, Rhonda average = 3.5 , raise = 3%

Mrs. Rhonda Perry, We would like to say thank you for all the hard work that you have shown throughout the conduction of this review. We are happy to tell you that you ranked an average of 3.5 on our grading chart. This places you in the bracket of employees that will be receiving a 3 % increase to your overall salary. You did very well when it came to knowledge and teamwork, earning a score of Going forward we do recommend you continue to better yourself in the areas that you scored lower on. Such as quantity and customer service. If these scores rise by the next pay review, you may be eligible for even higher raise potentials. Given all of this information, we will be increasing your annual salary from $34,320 to $35,349. This means that your hourly rate will go from $16.50 per hour to $17.00. Thank you for all of your hard work.

David

1. Bush, Gary - Average Score= 2.7, raise= 0%

Gary, thank you for your continued employment with us. It has been a pleasure having you as an employee for many years. As you know, each year, we evaluate your performance to ensure our employees are meeting company and customer expectations. This year, we have added a section that rewards those that are going above and beyond and helps those that need additional training to meet minimum expectations. Based on your current year’s results, you have four meets expectations and two needs improvement results. (in what areas?)This should not be a surprise based on our last annual review. The good news is you do not have a massive hill to climb to get back to a meets standard in all categories. Your highest scores were in knowledge, teamwork, quality, and customer service where you had a score of three in each, meaning you are meeting standards. The two areas of employment of initiative and quantity are where you had a score of 2 in each. Having known you since you started here, we feel a few adjustments will make all the difference. The biggest impact on you will be that we will not be able to increase your salary this year based on your performance. Effective immediately, we will be working with you for the 6 months to ensure standards are met, in an effort to improve your performance in that timeframe. In addition, we require that you attend a training program to help you in the particular areas you have the most room to improve. Your performance in (x and x) will be re-evaluated in 6 months to determine our next steps. We look forward to raising your scores and having you on the team for years to come.

2. Blanco, Maria- Average Score 2.7 Raise= 0%

Maria, we have reached the time of the year where we review all employee performance looking for outstanding performers, and those that need additional training or assistance. Based on your current results, you have met expectations in four categories and have a need for improvement in two sections (in what areas). These results have put you at the bottom of our current results when compared to those in your department. The good news is you have demonstrated your knowledge and ability to take initiative, so we feel you can move up the performance chart quickly. The two areas we will work on the most in the next 6 months are teamwork and quality. You will be required to attend a training course to improve your performance in these areas, which will be re-evaluated at the end of the 6-month period. We feel that you can become a real asset to the team because your knowledge, initiative, quantity, and customer service scores meet expectations. This year, we will not be giving you a salary increase. However, in an effort to bring you closer to the midpoint salary we will be giving you $124.80 as a one-time incentive. This is not a reward for your performance, but an act of good faith that you will show a real effort to improve and to hopefully retain you as an employee. We look forward to helping you improve and having a great review next year.

Shawn Simon

1. Porter, Henry average score=3.4, raise= 2

Thank you for your continued service over the past year. You have continued to meet the standard while showcasing the ability to take charge in many aspects. The knowledge and Initiative you have displayed have not gone unnoticed. A score of 4 in both areas accurately reflects your continued commitment and your outstanding performance. While I see the potential for advancement, I would like to address areas of development. In areas such as teamwork, quality, and customer service, you scored a 3, meaning you have met expectations. While satisfactory, I feel this score does not accurately reflect the abilities you display in other areas. You scored a 3.5 on quantity which was your second-highest score. Overall, you received a performance rating of 3.4. This rating makes you eligible for a 2% raise, increasing your annual pay from $36,400.00 to $37,128.00. This increase accumulates to $728.00.

Please continue to be an example while leading the way. I look forward to your progression throughout the upcoming year.

2. Gibson, Christine average score=3.6, raise= 3

Mrs. Gibson, I would like to congratulate you on another year of continued excellence. Your initiative, quality of work, and customer service have been above satisfactory this year, which explains a score of 3.5. Awe-inspiring work! More impressive was the display of your knowledge, as well as your teamwork. A rating of 4 in those areas shows me the level of dedication and commitment you have toward this company. One area that we will help develop in the future is your quantity of work. You scored a 3, which does not accurately reflect your ability based on what I believe that you can accomplish. In total, you received a performance rating of 3.6, which earns you a 3% increase in pay. You will increase from $34,840.00 to $35,885.20 annually.

Continue to be an example for others to follow within our organization. I look forward to what opportunities present themselves to you throughout the year.

Heather

1. Janel Ahmed

Janel, when considering your performance over the past year you have become one of our top performers. You received a perfect score of a 5 in customer service, a score of excellence. You should be very proud of your performance in this area, and I am executed to you not only maintain but flourish in this area. You also earned a score of 4, be outstanding, when evaluating your performance in quantity, quality, and actively taking initiative. The areas you and I can work together to improve include teamwork and knowledge. You received a score of 3 in both of these areas, which means you at least meet company standards. In total, you demonstrated work performance worthy of a 3.8. In light of this, you will be receiving a 3% raise which will increase your annual salary from $35,360.00 to $36,420.80. Keep up the amazing work and I look forward to helping you finetune your skills to reach your fullest potential. In helping you reach your goals, we will help the organization reach its strategic goals.

2. Tina Lozano

Tina, I have been very proud of the work you have done this past year, and you should take great pride in your work as well. While you have been with us for only a few years, you are the company’s top performer, with a total appraisal score of 4.3. You earned a score of excellence, a 5, in the knowledge competency. Both your drive to take initiative and your teamwork abilities earned a score of 4.5, meaning you are outstanding and on the cusp of excellence in these areas. In the areas of the quality of your sales and customer service, you earned a 4 meaning you are performing at an outstanding level. The area we can focus on developing in your skillset is your quantity of sales, of which you earned a score of 3.5 meaning you are performing slightly above meeting standards. To reward your performance we will be awarding you a 5% increase, which will bring you from an annual salary of $35,880 to $37,674. You have a lot of room to grow towards your midpoint salary, so I encourage you to maintain your excellent and outstanding performance in your strongest areas, and you will continue to progress into bigger opportunities. I am excited to help you grow in increasing your quantity of sales and you become more well-rounded in all of our core competencies. We will continue working with you and providing you with ongoing feedback to facilitate your growth.

Pay for Performance

David Albrecht, Alejandra Bustos, Heather Delgado, Cassidy Gardner, Shawn Simon

Department of Management & Marketing, College of Business

MGMT 4341.900: Compensation & Benefits Management

Dr. Adrian Guardia

November 25, 2021

Assigned essay paragraphs

David
Alejandra
Heather	· Introduction, defining pay for performance and its significance · Background/summary of the case
Cassidy
Shawn