CARTER CLEANING COMPANY - The New Pay Plan Carter Cleaning Centers does not have

Question

CARTER CLEANING COMPANY - The New Pay Plan

Carter Cleaning Centers does not have a formal wage structure nor does it have rate ranges or use compensable factors. Wage rates are based mostly on those prevailing in the surrounding community and are tempered with an attempt on the part of jack Carter to maintain some semblance of equity between what workers with different responsibilities in the stores are paid. Carter does not make any formal surveys when determining what his company should pay. He peruses the want ads almost every day and conducts informal surveys among his friends in the local chapter of the laundry and cleaners trade association. While Jack has taken a "seat of the pants" approach to paying employees, his salary schedule has been guided by several basic pay policies' Although many of his colleagues adhere to a policy of paying minimum rates, Iack has always followed a policy of paying his employees about 10% above what he feels are the prevailing rates, a policy that he believes reduces turnover while fostering employee loyalty. Of somewhat more concern to Jennifer is her father's informal policy of paying men about 20% more than women for the same job. Her father's explanation is "'they're stronger and can work harder for longer hours, and besides they all have families to support."

Questions

l. Is the company at the point where it should be setting up a formal salary structure based on a complete job evaluation? Why?

2. Is Jack Carter's policy of paying l0% more than the prevailing rates a sound one, and how could that be determined?

3. Similarly, is Carter's male-female differential wise? If not, why not?

4. Specifically, what would you suggest Jennifer do now with respect to her company's pay plan?

Explanation / Answer

Given Information :

CARTER CLEANING COMPANY - The New Pay Plan

Problem : Carter Cleaning Centers does not have a formal wage structure nor does it have rate ranges or use compensable factors.

Facts :

Wage rates are based mostly on those prevailing in the surrounding community

Tempered with an attempt on the part of jack Carter to maintain some semblance of equity between what workers with different responsibilities in the stores are paid.

Carter does not make any formal surveys when determining what his company should pay.

Carter peruses the want ads almost every day and conducts informal surveys among his friends in the local chapter of the laundry and cleaners trade association.

Jack has taken a "seat of the pants" approach to paying employees,

Salary schedule has been guided by several basic pay policies' Although many of his colleagues adhere to a policy of paying minimum rates

Jack has always followed a policy of paying his employees about 10% above what he feels are the prevailing rates

Policy that he believes reduces turnover while fostering employee loyalty.

Father's informal policy of paying men about 20% more than women for the same job.

Explanation is "'they're stronger and can work harder for longer hours, and besides they all have families to support."

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l. Is the company at the point where it should be setting up a formal salary structure based on a complete job evaluation? Why?

Ans :

Here we can not say exactly that company is at the point of setting up a formal salary structure on a complete job evaluation basis. Because the explanation given above : no formal survey , Information collected through informal survey like association or trade unions. Mostly for giving salary the other companies pay polices have been followed by Carter in informal way.

So from this information it does not seems that company is going to Set formal Salary Structure.

2. Is Jack Carter's policy of paying l0% more than the prevailing rates a sound one, and how could that be determined?

Ans :

Jack Carter's policy of paying l0% more than the prevailing rates may be sound one.See all the companies are giving more benefits to their employees , what are the reasons ,

1 ) Employees Satisfactions

2) To motivate Employees

3) To improve the standard of living

4) To maintain & create Good Will of the company

etc

If Carters company is doing well , earning profit more than expected level , then there can not be any issue of paying salary more in 10 %

But if Expected profits are not matching then carter needs to analyse the case.

3. Similarly, is Carter's male-female differential wise? If not, why not?

See in today's globalized world we can not make difference between Male & Female . Of course the strong work done by male category needs to be considered .So in this case he can set a productivity measure tools.

Productivity = Output / Input

What Output you have produced

What Input you have given .

So instead of differentiating Male & Female category , If Carter follows Input , Output relationship that can give proper balance to pay structure.

4. Specifically, what would you suggest Jennifer do now with respect to her company's pay plan?

Jennifer needs to have communication with Jack carter . First up all discuss all the issues , concerns , problems face to face wit Jack carter.

Understand why Jack carter is giving 10 % more wages to Male , what work they are doing , that kind of work is possible for Women

Analyse the whole situation

Though the company is not having formal pay structure still all the wages are given by considering other associates , trade unions etc

10 % more wages compare to other company.

These all are positive points from carter side, still there is some scope of improvement fro him on the view of company & formal pay policy.

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