1. What factors should Perkins and Balkin consider when setting the wage for the purchasing agent position? What resources are available for them to consult when establishing this wage? Katie Perkins opened her own sports store. The company grew quickly and she hired 16 employees to manage different areas of the store. After a while Perkins decide to open a new position for a purchasing agent. When setting the wage for the purchasing agent position Perkins and Balkin must consider their internal and external factors. Internal factors include compensation strategy of the organization, worth of the job, employee’s relative worth and employer’s ability to pay. A company’s compensation strategy is how they plan to compensate their employees in general terms. The worth of a job is just what it says, what that position is worth to the company in the revenue or cost savings it generates. External factors include conditions of the labor market, area pay rates, cost of living, collective bargaining and legal requirements. The labor market reflects how much supply and demand there is within the industry for a particular position.
2. Suggest advantages and disadvantages of a pay-for-performance policy for Perfor- mance Sports. The advantages of a pay for performance policy is typically that productivity is increased while overall employee compensation costs are decreased because it doesn’t pay poor performers well. The disadvantages are measuring employee performance isn’t always easy. There will always occur some discrepancies in the performance level measured by the employer and actual performance level obtained by the employee which leads to dissatisfaction and decrease in motivation of the employee. 3. Suggest a new payment plan for the customer service representatives.