Zenith Medical Systems Incorporation

Table of Contents
A. IDENTIFICATION OF ORGANIZATIONAL PROBLEMS ................................................................................. 3 High Employee Turnover Rate .................................................................................................................. 3 Dissatisfaction of the Employees .............................................................................................................. 3 Dissatisfaction of the Customers .............................................................................................................. 3 Ignorance of the top management ........................................................................................................... 3 Lack of trust............................................................................................................................................... 4 Lack of co-operation ................................................................................................................................. 4 Decreasing Revenue.................................................................................................................................. 4 Poor quality products and bad reputation of the company ..................................................................... 4 Late deliveries ........................................................................................................................................... 4 Falling Sales ............................................................................................................................................... 4 B. RECOMMENDED SOLUTIONS TO THE PROBLEMS AT ZENITH MEDICAL SYSTEM ..................................... 5 Reduce the employee turnover ................................................................................................................ 5 Hiring the right people .............................................................................................................................. 5 Making the system Employee-Oriented ................................................................................................... 5 Developing an appropriate strategic compensation package .................................................................. 6 Proactive System Development ................................................................................................................ 6 Enhanced Quality of Service ..................................................................................................................... 7 Lowered Costs of the Products ................................................................................................................. 7 Increased Employee Morale ..................................................................................................................... 8 Higher Customer Satisfaction ................................................................................................................... 8 C. COMPENSATION STRATEGY ...................................................................................................................... 9 D. JOB EVALUATION .................................................................................................................................... 16 Compensation Factors ............................................................................................................................ 17 Compensation Subfactors and Levels ..................................................................................................... 18 Allocating Points ..................................................................................................................................... 24 E. PAY FOR KNOWLEDGE [PFK] ................................................................................................................... 30

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Works Cited ................................................................................................................................................. 34 Appendix ............. 35

Zenith Medical Systems Incorporation

A. IDENTIFICATION OF ORGANIZATIONAL PROBLEMS

High Employee Turnover Rate
The principal problem that Zenith is facing is high employee turnover rate. Two major reasons for their turnover are absence of intrinsic rewards and job satisfaction. Because of the lack of intrinsic motivation and job satisfaction employees are not interested in performing their work. Due to these two factors employees lose their interest and motivation to do the work. Workers are closely observed by their supervisors and have no freedom to take the participation in the decision-making procedure for their company so they feel that the company ignores them. This feeling of ignorance causes lack of membership behaviour and citizenship behaviour among them, which gives the birth to high employee turnover rate.

Dissatisfaction of the Employees

Employees are not satisfied with their work as well as their pay system. Most of the employees are paid fixed base pay and on commission basis. Performance pay system encourages sense of competition among employees, which lead them into dissatisfaction with their job and employers. Mostly sales staff is dissatisfied with the pay system because their base pay is very low and they are paid on commission basis that solely depends on the sale. But, because of the companys reputation and quality of the products sales are not high so they are not able to get the high income and feel dissatisfaction. Because a sales person who is innovative and eager to do his/her best do not find the opportunities to earn more and satisfy their needs. Another reason of their dissatisfaction is that they have to face the clients anger and abuses without any fault.

Dissatisfaction of the Customers

Customers of the zeniths products are totally unhappy with the company because company makes a lot of promises but did not fulfill them. By keeping numerous promises company attracts a large number of customers but it become a hard matter for the Zenith to fulfill all the demands of customers at a proper time or within a short period of time. So customer faces the problems of late delivery, low quality lack of up to date features of the systems. The customers disappointment became more atrocious when company started charging from the customers for the failure of poorly designed system that was zeniths responsibility not the customers.

Ignorance of the top management

Managements ignorance nature also created many problems that could be stopped to occur if management gives his consideration towards them. Management was familiar with the problems of sales decreasing, over budgeted but they did not take appropriate steps and do efforts to nip these problems in the beginning.

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Lack of trust
Zenith has a large number of employees and they are divided into different departments. These departments do not have trust upon each other. They always blamed each other for the poor quality of work and tried to find incompetency within other departments like system department thinks that installation problems are occurred because of the incompetency of installation department and pitiable understanding of marketing department. System maintenance blames system department for making a poor quality systems, installation department for faulty installation, marketing department for idealistic false promises with customers. All the departments have worst relationships with each other.

Lack of co-operation
Workers do not have trust on each other, as well as there is a lack of cooperation and coordination between them. Workers are limited to do their own jobs. They are not interested to do the help of their co-workers. They have a limited prospective around their job. They have no feelings of brotherhood and good relationships at the workplace. Their only interest is to fulfill their own needs. They have no spirit of teamwork and motivation to work together. They created an individualistic environment at the workplace.

Decreasing Revenue
Due to the insufficient work quality s faced a lot of problems with the systems .to deal with those problems and to improve the failures of systems, maintenance department have to spend a large amount of time in repairing the crashes or provide those quality products that were promised with the customers. In this way company spent its most time to perform those activities that are not helpful to gain the revenue, which is very helpful to raise its economy and profits.

Poor quality products and bad reputation of the company

Zenith failed to provide standard quality products to their customers. All customers have complaints about its product quality. They are very disappointed because they did not get those standard products that were promised by the company at first. Poor quality of the products left a negative impression on companys reputation and in the market zenith loses its good reputation.

Late deliveries
Because of the keeping so much promises and unavailability of time, company always fail to meet the time lines and result is late deliveries.

Falling Sales
Sales of the Zenith medical systems are going to decrease continuously. Sales dropped loss of $5,000,000.this is the result of unsatisfied customers, late deliveries, failure of systems. The root causes for all the problems in zenith medical systems are its compensation system, managerial strategy and poor reward system. Employees base pay is low and variation in pay basis like performance pay, incentives and commission based pay also create a difference and problems among the workers. Classical managerial strategy is using in the Zenith medical systems. Top management 4

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under strict guidelines makes decisions. Workers are doing the work under the controlled supervision and they have no right to give their opinions in the decisions making process. Reward system is also not good. No intrinsic rewards are for the workers that can motivate them towards their work. Insufficient reward system is responsible for the lack of two types of behaviour of the employees-membership behaviour and citizenship behaviour. Absence of this behaviour causes job dissatisfaction, lack of cooperation, lack of motivation in the employees.

B. RECOMMENDED SOLUTIONS TO THE PROBLEMS AT ZENITH MEDICAL SYSTEM

As it has been analyzed above Zenith faces many problems and for the intention of bringing it back to the advantageous position there is need to originate solution to these problems. An attempt is made to find out solutions in regard to the above-mentioned problems.

Reduce the employee turnover

Employee turnover has become a serious problem in the present corporate world. Changing jobs every few years rather than growing with one company throughout the employment life has now become a common thing. Turnover costs very high for many organisations and can effect financially. These costs generally include: recruitment, selection and training of new people, increased workloads, and overtime expenses for co-workers as well as reduced productivity. In the case of Zenith Medical Systems, from the development stage to the installation of the software programs there had been a relative increment in blaming each other departments for deficiencies. As a result departments are not working together and hence it results into the high turnover. At this stage Zenith should measure the cost of turnover, develop retention strategy and change the workforce culture. Some initial steps are suggested below to reduce the employee turnover.

Hiring the right people

The first and foremost step to reduce the employee turnover is to hire the right people. Hiring the right people who are good fit with the organisations culture means their values, goals and principles matches with those of the organisation. After hiring the right people a proper training and orientation is required to go a long way towards ensuring employee retention and loyalty. While looking up on the long-term goals, investment in upgrading the workforce is the best investment. So Zenith should plan its selection and recruitment strategy in a good way to reduce the employee turnover.

Making the system Employee-Oriented

Trust, loyalty and mutual understanding between the employees and management are the basis of many successful organisations with low employee-turnover. Zenith should give its employees an opportunity for advancements and should not micro-managed. Employees should be given credit for

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their contribution. Zenith should solicit input and involvement from the employees and should maintain open-door policy rather than the closed-doors meetings. So Zenith should develop an open communication and employee input culture to reduce the employee-turnover.

Developing an appropriate strategic compensation package

Creativity in compensation and benefits can make quite a difference to the welfare of the employees. Zenith should assess overall employees needs while concerning the retention issues. Zenith should develop an overall strategic compensation package that includes not only base and variable pay scales but long-term incentives compensation, bonus and gain-sharing plans, benefit plans to address the health and welfare issues of the employees and non-cash rewards and perks as well. In this way employee turnover can be reduced to some extent.

Proactive System Development

The main problem at Zenith is in the systems development stage which is fundamental to how systems operate and design function that allow user to maximize its usage. Zeniths current practice is to use a standard basic template to design its systems which may fair well for smaller and non-specialized companies. However, for larger and more specialized companies this system creates issues regarding development times for additional functions and thus affects delivery to the customers. With the accumulation of an incentive plan such as a Gain Sharing Plan we can promote cost savings and show that by saving on cost each person can benefit on a quarterly or annual basis. Moreover since systems are developed from one basic program template it allows Marketing and Sales to promote additional features increasing time and costs. Zenith also needs to create an inventory. Utilizing the information gained from its competitors Zenith should develop several different system programs and gear each software template to specific needs within the market place. Once the various system programs have been designed Zenith can then focus on special features and promotion the technology thus creating an inventory of quality programs and software. These programs can then be used as models and catalogued for prospective customers. An inventory will also lead to reduction of budgeted hours as required by Systems Development and lead to cost savings and competitive pricing to the customers. In some cases customers may require enhanced features or need to make adjustments to the programs to suit its individual requirements but because the systems are set as they are, Zenith can choose to charge more from the company to make any enhancements resulting in additional revenues. Another advantage of having inventory will be that it creates a set structure and prevents designers from producing duplicates. Inventory quality measurements can be easily handled and system updates can be done frequently to ensure that programs and software is kept up to date with new technological services. In this way, Zenith can provide competitive prices and high quality products and services.

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Enhanced Quality of Service

The addition of having an inventory Zenith can focus on and promote service quality. Zenith was experiencing service quality issues when systems were being developed from the one basic template. With a set and catalogued inventory Marketing and Sales can start promote quality and ensure customers that these programs and software have been tested. They can focus on the benefits of each of the programs they offer and how it benefits the customers organization. Zenith can also allow some flexibility on pricing to the customer because of the reduced cost incurred during the development stage, further allowing some autonomy to Marketing and Sales in this area with set limitations properly laid out. This flexibility will allow marketing and Sales to gage their potential customers and increase the chances of sales generating higher commission and revenues for the organization. Marketing and Sales will no longer have to focus on sales techniques that will increase the cost of the systems to the organization and can promote additional features at a bargain price again creating an additional revenue stream for them as well as the organization. The inventory will not only help Marketing and Sales to provide service quality but it will also allow for Systems Development Department and its software engineers to continually test and maintain their inventory of programs. In doing this Zenith can feel confident that these continual tests will result in high quality programs reducing and ultimately eliminating frequent program crashes thus providing a systems program to the customers that meets their needs. The problem of delays in system delivery can also be eliminated with the newly founded inventory because these programs are already designed and tested thus can be shipped to the customers on time meeting the installation deadlines. The installation department will no longer have to deal with unsatisfied customers and wont have to spend additional hours making installation thereby maintaining a better service quality.

Lowered Costs of the Products

With the changes made in the development of the software and maintenance of inventory, the designs will be already prepared thereby reducing time delays hence leading to reduced product cost. Zenith may initially have to spend additional resources to create this cache of inventory however once it is created the savings from additional labour costs and designing of each system from scratch will be substantially reduced. These product cost savings can then be used to increase the organizations cash flow and help to promote additional revenues through other area within the organization. With product cost being low Zenith also has the ability to offer their programs and software at a lower price having a rewarding impact on the companys ability to gain market share. In addition, it will help to increase the profit margins on the programs and software that Zenith sells to its customer and will enhance the profitability on Zeniths balance sheets. Zenith plans to make its company public on the Stock Exchange with a balance sheet, showing profitability making it likely that Zenith will be able to attract potential investors that are looking for companies which have solid methods and a strong balance sheet to invest in, with the injection of new capital from investors Zenith will have more money to operate with and to continue 7

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to grow in size, capability and market share. As Zenith continues to grow and increase its capabilities it will be able to expand its services and generate larger volumes of revenue.

Increased Employee Morale

Employee morale within Zenith dropped considerably because of all the problems the organization was going through. From the development stage to the installation of the software programs there had been an increase in the departments blaming each other for deficiencies. As a result departments were not working together and hence high turnover. Employee morale can start to show signs of improvement with the addition of simplified process incorporated in the development stage. The addition of an inventory and some autonomy to Marketing and Sales it will be made easier for Marketing and Sales to explain the particular needs of the customers. The Development Department will easily get what kind of system software is needed to be prepared and make it ready for shipment within the timeframe determined. This will help to develop cordial relations between the Marketing and Sales and the Development Department. With the reduction in product cost and a greater sense of competitive pricing, Marketing and Sales will be able to generate higher sales revenue. The Installation Department will also start to see increases in morale with fewer complaints about the installations and less delays in providing the systems to the customers. All of the changes made will go very far in increasing morale among the different departments with respect to the new simplified processes and will result in low turnover rates. Promoting the concept of team within the organization can now be implemented and sustained because each department will now help foster one another using the simplified processes and will stop blaming each other for issues arising internally or in the market place.

Higher Customer Satisfaction

Customer dissatisfaction has also played a role in the companys losses in its second year of operations. Customers always had to face problems with programs they purchased whether it was systems related or on time delivery. With an inventory of quality programs suitably tested and capable to provide what the customer needs will help Zenith to increase customer satisfaction. Customer Satisfaction is crucial in creating a good reputation for Zenith and will result in an increase in purchases in the future creating loyalty with its current customer and potential ones. With the implementation of these changes Zenith will also be able to meet timelines for delivery and installations helping the customer to continue its business function with no delays. Zenith will have the ability to provide standard products and services to its customers to compete with its competitors and also leading to enhanced customer satisfaction.

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C. COMPENSATION STRATEGY
Figure 1.

Job family Applied Sciences Applied Sciences Applied Sciences Applied Sciences Applied Sciences Applied Sciences Applied Sciences

Job title
Systems Integration Specialist Senior Systems Installation Specialist Senior Systems Hardware Analyst Junior Systems Trainer Junior Applications Programmer System Design Analyst Intermediate Applications Programmer Senior Applications Programmer Regional Marketing Manager Systems Marketing Specialist Secretary

Level Intermediate Level Advanced Level Advanced Level Entry Level Entry Level Intermediate Level Intermediate Level

Behaviour Task Citizenship Citizenship Task Task Task Task

Applied Sciences Communication and Marketing Communication and Marketing Finance and Administration Finance and Administration Finance and Administration Human Resources Human Resources Management

Advanced Level Advanced Level Intermediate Level Entry Level Intermediate Level Entry Level Intermediate Level Entry Level Intermediate Level

Citizenship Citizenship Citizenship Task Task Task Citizenship Task Task

Accountant
Compensation Clerk Compensation Manager Compensation Officer Manager of Financial Systems Development Director of Human Resources

Management

Advanced Level

Citizenship

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Management Management

Director of Systems Development Director of Marketing

Advanced Level Advanced Level

Citizenship Citizenship

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Figure 2 Compensation Strategy Template Finance and Administration Entry/Intermediate 65% 65% 10% 10% Applied Sciences Entry 65% 65% 20% 20% 65% 25% Applied Sciences Intermediate 65% Applied Sciences Advance 70% 70% 25%

1. BASE PAY a. Market pricing b. Job Evaluation c. Pay for knowledge 2. PERFORMANCE PAY a. Individual performance pay i. Piece rate ii. Sales Commissions iii. Merit raises iv. Merit bonuses v. Special incentives b. Group/team Performance pay i. Gain sharing ii. Goal sharing c. Organizational Performance Pay i. Profit sharing ii. Stock bonus plans iii. Stock purchase plans iv. Stock Option Plan 3. INDIRECT PAY i. Mandatory benefits Canada Pension Plan Employment Insurance ii. Health benefits

5% 5% 20% 10% 10%

5% 5% 20% 10% 10%

25% 5% 5% 5% 5%

15% 5% 5% 5%

10% 5% 5%

5% 5% 3% 2%

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Supplemental health Insurance Disability Insurance Dental Insurance iii. Pay for time not worked Vacations, Holidays, breaks Sickness, Compassionate Absences

3% 2%

3% 2%

Compensation Strategy Template

Communication and marketing

Human resources Intermediate 65%

Management Intermediate Advanced 70% 70% 70%

1. BASE PAY a. Market pricing b. Job Evaluation c. Pay for knowledge 2. PERFORMANCE PAY a. Individual performance pay i. Piece rate ii. Sales Commissions iii. Merit raises iv. Merit bonuses v. Special incentives b. Group/team Performance pay i. Gain sharing ii. Goal sharing c. Organizational Performance Pay i. Profit sharing

Advance/Intermediate Entry 70% 65% 65% 70% 20% 20% 20%

65% 25%

70% 20%

25%

5% 5% 15% 5%

5% 5% 20% 10%

5% 5% 15% 5%

5% 5% 20% 10% 12

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ii. Stock bonus plans iii. Stock purchase plans iv. Stock Option Plan 3. INDIRECT PAY i. Mandatory benefits Canada Pension Plan Employment Insurance ii. Health benefits Supplemental health Insurance Disability Insurance Dental Insurance iii. Pay for time not worked Vacations, Holidays, breaks Sickness, Compassionate Absences

10% 5% 10% 5% 5% 15% 5% 3% 2% 5% 3% 2% 10% 5% 5% 5% 10% 5% 5%

10%

5% 5% 3% 2%

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According to Armstrong Job family is defined as a series of progressively higher, related jobs distinguished by levels of knowledge, skills, and abilities (competencies) and other factors, and providing promotional opportunities over time (Armstrong, 2002) The purpose of job family development is first, to improve the employee capability in the work environment by selecting and placing the adequate personal to ensure better performance when executing the tasks; second, the retention of desirable employees who contribute to the organizations with their expertise and endeavour; third, improve individual execution of tasks and productivity; fourth, reduce the need of direct management. According to table 1, the job family is listed above for Zenith Cooperation. It was divided by the finance and administration job family: entry level positions such as accountant, secretary and compensation clerk; the human resources job family: compensation manager and compensation officer both in the intermediate level; the management job family: manager of financial systems development, director of human resources, director of systems development and director of marketing; the applied sciences job family: Junior Systems Trainer, Junior Applications Programmer, Intermediate Applications Programmer, Senior Applications Programmer, Senior Systems Installation Specialist, Systems Integration Specialist, Senior Systems Hardware Analyst, System Design Analyst; and finally, the Communication and Marketing job family: systems marketing specialist and regional marketing manager. As noted on the job family table, each of job position is classified as entry level, intermediate level and advanced level; these were made necessary to ensure the required behaviour is successfully achieved on Zenith organization compensation strategy. By classifying the job in levels, it is possible to determine what type of job requires more supervision. For example, the entry level positions, such as secretary, compensation clerk are characterized as jobs which positions required less supervision and tend to follow permanent bases guides. On the other hand, advanced level positions, individuals work more independently, have autonomy to make decisions and work towards a successfully accomplishment of tasks. For the Finance and administration, the jobs secretary, accountant and compensation manager, there is a need to induce task behaviour. Therefore, the lower order needs must be satisfied which include physiological and security needs. To be able to fulfill those needs, a mix of compensation is based on 75% market price base pay and 15% indirect pay divided as following: 5% mandatory benefits which is 5% for Employment Insurance and 5% for CPP; 5% on Health benefits which includes 3% for supplemental health and 2% for dental insurance and 10% for individual performance pay as shown on figure 2. For the communication and marketing job family, the plan is designed to promote the membership behaviour in the jobs Regional marketing manager and the System marketing specialist. The employees in the Marketing department are working individually to achieve their group goals. Organizational performance pay is the most suitable for the communication and marketing department as they must 14

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think as owners to produce a behaviour that will benefit the company overall. They have to think about the layers below them to achieve their goals. Before they can make any profit they will be more careful talking and recommend an appropriate system to customers. They will consider the programmer department who will create the best system to customers. To accomplish this behaviour the compensation mix is as follows. 70% for base pay on the basis of Pay for knowledge. 20% for performance pay out of which 5% for group performance pay gain sharing. 15% for organizational performance plan 10% stock option plan and 5% is profit sharing plan. The remaining 10% for indirect pay; out of which 5% for CPP and 5% for Employment Insurance. For the applied science job family, the jobs Junior Systems trainer and Junior Applications programmer are both entry-level jobs. In these jobs we have designed the plan to stimulate the task behaviour. This is to foster the timely completion of the jobs assigned to them and to encourage quality control while they installing systems. To encourage this behaviour the mix of compensation plan is 65% for Base pay, 20% for Performance pay, of which 20% is for individual performance pay and 15% for Indirect pay. The indirect pay comprises of mandatory benefits for 5%, Employment Insurance for 5%, health benefits for 5%, supplemental health insurance for 3% and dental insurance for 2%. For the applied science intermediate level, the jobs are Systems Integration Specialist, System Design Analyst and intermediate Applications Programmer. The desired behaviour is citizenship behaviour. This is to provoke creativity in development of systems and skill development of employees. This behaviour is also to encourage accomplishing the task in a timely manner. Here the compensation mix is as follows. 70% is for the base pay pay for knowledge. 25% is for the performance pay, out of which 5% is for group performance pay Goal sharing. And 20% is for the Organizational performance pay, out of which 10% is for the Profit sharing plan and 10% for the stock bonus plans. This way the employees at the intermediate level will feel that they are the part of their organization well being and profit. This compensation mix will help them work harder to achieve their groups and organizations goals effectively and efficiently. For the Applied science - advance level, the jobs are Senior Systems Installation Specialist, Senior Systems Hardware Analyst and Senior Applications Programmer. The desired behaviour is organization citizenship behaviour. Here in order to infuse the desired behaviour the compensation mix is as follows. 70% is for the base pay on the basis of job evaluation. 25% is for the performance pay, out of which 5% is for the group performance pay goal sharing. This is to induce the team work. 20% is for the organizational performance pay, out of which 10% is for the profit sharing and 10% is for the stock bonus plan. This is to make them believe that they are an element of the organization. The remaining 5% is for the mandatory pay, of which 3% is for the Canadian pension plan and 2% is for the employment insurance. Under the job family of Human Resources there are jobs Compensation Manager at an intermediate level and Compensation Officer at an entry level. The desired behaviour for the compensation office is task. Therefore we have designed the following compensation mix. The base pay is 65% job evaluation. The performance pay is 20% individual performance pay. 15% for indirect pay, of which 5% is for mandatory, benefits i.e. 3% of CPP and 2% of 15

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Employment Insurance. There is also 5% of health benefits i.e. 3% of supplementary health insurance and 2% Dental insurance. The desired behaviour for the compensation manager is citizenship behaviour. The compensation mix to induce citizenship behaviour in this job is as follows. The base pay is 65% pay for knowledge. The performance pay is 25% of which 5% is for the group performance goal sharing, in order to increase the team efficiency and encourage the team player nature. 20% is for the organizational performance pay 10% profit sharing and 10% stock bonus plan. This is for motivating them to be a part of the organizations growth and well-being. And the remaining 10% is for the indirect pay of which 5% is for the Canada pension plan and 5% is for the employment insurance. The Management job family has Manager of Financial Systems Development job at an intermediate level. And Director of Human Resources, Director of Systems Development and Director of Marketing at an advanced level. The desired behaviour for the Manager of Financial Systems Development job is task behaviour. Hence in order to inculcate this, behaviour the following is the compensation mix. The base pay is 70% pay for knowledge. The performance pay is 20%, of which the 5% is for the gain sharing plan to induce teamwork and 15% for the organizational performance pay, of which 5% is for Profit sharing and 5% for stock option plan. And the remaining is 10% for the indirect pay, of which 5% is for Canadian pension plan and 5% is for Employment insurance. The jobs i.e. Director of Human Resources, Director of Systems Development and Director of Marketing are at an advanced level. Here in order to encourage the citizenship behaviour the following is the compensation mix. The base pay is 70% of job evaluation. The performance pay is for 25%, of which 5% is gain sharing. The organization performance pay is 20%, of which 10% is for the profit sharing and 10% is for the stock bonus plan. The remaining 5% is for the indirect pay in which the 2% is for the employment insurance and 3% is for the Canadian Pension plan. This way the management will be more drawn in with the organizations goals and objectives and hence they will work towards the growth and success of the organization.

D. JOB EVALUATION
This job evaluation is an effectively tool used to explain to employees their duties and responsibilities within Zenith Organization, as well as possible expectations the company is seeking to acquire by maintaining the existing employees and promoting future opportunities within the company. According to Long, Job evaluation is an assessment of the relative worth of various jobs on the basis of a consistent set of job and personal factors, such as qualifications and skills required. The two major objectives of job evaluation are to develop internal standards of comparison and to measure relative job values within the organization (Long, 242) 16

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While there several methods available, for Zenith organization was selected the point method system, which will include the four following factors: Skills, efforts, responsibilities and working conditions. Each factor will be specifically explained further.

Compensation Factors
Skills 50% Each job position involves a specific level of knowledge and skills to successfully perform the job. It can be the abilities and competencies an individual might have which will be indispensable for executing the job. The knowledge and skills can be acquire by obtaining education, specialized training, or through work experience. Education factor measures the least level of formal education accomplished, training specialization, professional certifications or licenses necessary to perform the job. Experience factor measures the least total of related acquired job experience, gained by performing job related position or through other ways. Efforts 10% Within Zenith Company, there are many jobs that require different levels of knowledge and ability in solving problems and complexity. Complexity factor is responsible to measure the diversity, difficulty, significance of duties and the demanding to execute the job. Problem solving factor measures the ability an employee have to identify, analyze, emerge with relevant possible solutions and implement them; also the magnitude of autonomy an employees have when making decisions, suggest products and services and apply procedures. Responsibility 30% Analyze of probability of serious errors independently of possible cause which should include the responsibility of an individual in dealing money, equipment, services delay, time spending correcting the errors, inaccurate information data collected, decrease of organizations morale and reputation. Supervising others factor measures the level of accountability an employee has over others quality of work. Accountability factor measures the complexity of a given job and access the potential results; and also the reason why certain job still part of the organization. Working Conditions 10% This factor is used to measure the censorial and mental concentration required to perform a specific job, which can be affected, by the environment, hazardous and safety conditions. 17

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Censorial effort measures the level, length, and oftenness of a job requires for concentration utilizing the senses. Mental effort factor measures the level, length and oftenness of a job requires for performing a specific job which lead to mental strain.

Compensation Subfactors and Levels

Education (450) Level 1 (30 points) Elementary School or some high school diploma or general equivalency education.

Level 2 (60 points) High school diploma and/or equivalent and specialized training.

Level 3 (90 points) Bachelors Degree from four-year College and/or equivalent. Level 4 (120 points)

Bachelors Degree from four-year college/equivalent and specialized training or Certification.

Level 5 (150 points) Masters Degree or equivalent; or Post Graduation training and certification.

Work Experience (300)

Level 1 (20 points) Requires less than 12 months of related experience.

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Level 2 (40 points) Requires one to three years of related experience and working knowledge of related field.

Level 3 (60 points) Requires more than three years to five years and working knowledge of related field.

Level 4 (80 points) Requires more than five years to seven years of related experience.

Level 5 (100 points) Requires more than seven years of related experience.

Complexity (60) Level 1 (4) Work is uncomplicated, includes manual effort and uncomplicated work routines.

Level 2 (8) Work requires some level of experienced and some abilities to operate specialized equipment.

Level 3 (12) Work requires moderate specialized skills, which requires some technical knowledge to operate specialized equipment.

Level 4 (16)

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Substantial knowledge and skills acquired by vast work experience in the related field, which involve application of theoretical knowledge to pragmatic tasks.

Level 5 (20) Expertise in theoretical complex techniques acquired by extensive work experience in the related field with special ability to develop applications.

Problem Solving (90)

Level 1 (6 points) Supervisor, restricted possibility to exercise autonomous decision, constantly revises work. Report majority of problems to supervisor.

Level 2 (12 points) Work is done under general supervision, sporadic autonomy to decision-making and application of procedures. Report general problems to supervisor.

Level 3 (18 points) Work duties performed within considerable freedom, relatively independent judgment to apply procedures, freedom to give advice that affects practices. Inform chances and applied practices to supervisors.

Level 4 (24 points) Develops work duties and apply practices to important function within a section, routine work and decision do not have the need to be revised by supervisor, often resolve difficult problems, but final results are revised by immediate supervisor.

Level 5 (30 points)

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Formulates decisive guidance for goals, plans and procedures for one or more area of responsibility. Establish accountable comprehensive objectives for total results within the area of responsibility. Autonomy for decision-making.

Supervising Others (180) Level 1 (5 points) Little or no supervising duties.

Level 2 (10 points) Supervise workers within same jobs duties and give work guidance to employees.

Level 3 (15 points) Help Management to supervise a small department.

Level 4 (20 points) Manage one department. May manage supervisors and guide the work tasks of employees.

Level 5 (25 points) Manager one department and supervisors delegate and direct the work tasks to employees. May execute performance appraisals and gives suggestions for discipline.

Level 6 (30 points) Help director in managing and delegating the work tasks to employees in related department, provides general directions to the department.

Level 7 (35 points)

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Responsible for total direction of the department through managers and perform some human resources duties.

Level 8 (40 points) Responsible for total direction of more than one department through managers and perform human resources duties, with power of hiring and terminating employees.

Accountability (270) Level 1 (18) Consequences usually affect one person or some parts of the related department.

Level 2 (51) Consequences usually affect a unit of the department and may affect external limited portion of customers outside the organization.

Level 3 (84) Consequences typically affect the whole department and may affect other departments as well. Great portion of customers outside the organization can also be affected by the results.

Level 4 (117) Consequences can essentially affect other departments, moving through organizations as a whole and affecting substantially customers outside the organization. Censorial Effort (90) Level 1 (6) The work does not require great amount of concentration and it does not lead to stress or fatigue.

Level 2 (17)

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The work requires low level of concentration and it leads to low level of stress and fatigue.

Level 3 (28) The work requires moderate level of concentration and it can result in moderate stress and fatigue.

Level 4 (39) The work requires high level of concentration and it can result in high stress and fatigue.

Mental Effort (60)

Level 1 (4) The work does not require great amount of mental concentration and it does not lead to stress or fatigue.

Level 2 (8) The work requires low level of mental concentration and it leads to low level of stress and fatigue.

Level 3 (12) The work requires moderate level of mental concentration and can result in moderate stress and fatigue.

Level 4 (16) The work requires moderate level mental concentration, frequently interruptions, demanding schedules, deadlines and, multi tasks.

Level 5 (20)

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The work requires high level of mental concentration, with very long period of continuous concentration. Frequent interruptions, tide deadlines and, great ability to perform multi task. (job evaluation chart see appendix A figure 2)

Allocating Points
Skills Education Total points in job evaluation plan: Weight of the factor skill: Points assigned to skills: Weights allocated to subfactors Education Experience Points allocated to Education Points allocated to Experience 750 x 0.4=300 Number of levels for subfactor Education Assigned points to lowest level Subfactor weight x factor weight = lowest point value 0.6 x 0.5 = 30 points Education subfactor points allocated to each level Level 1 = 30 points Level 2 = 30 + 30 = 60 Level 3 = 60 + 30 = 90 Level 4 = 90 + 30 = 120 Level 5 = 120 + 30 = 150 5 60% 40% 750 x 0.6=450 1,500 points 50% 1,500 x 0.5=750

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Experience Weights allocated to subfactors Education Experience Points allocated to Education Points allocated to Experience 750 x 0.4 = 300 Number of levels for subfactor Education Assigned points to lowest level Subfactor weight x factor weight = lowest point value 0.4 x 0.5 = 20 points Experience subfactor points allocated to each level Level 1 = 20 points Level 2 = 20 + 20 = 40 Level 3 = 40 + 20 = 60 Level 4 = 60 + 20 = 80 Level 5 = 80 + 20 = 100 Effort Complexity Total points in job evaluation plan: Weight of the factor Effort: Points assigned to Effort: Weights allocated to subfactors Complexity Problem Solving Points allocated to complexity 150 x 0.4 = 60 40% 60% 1,500 points 10% 1,500 x 0.10=150 5 60% 40% 750 x 0.4 = 300

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Points allocated to Problem Solving Number of levels for subfactor Complexity Assigned points to lowest level Subfactor weight x factor weight = lowest point value 0.4 x 0.1 = 4 points Complexity subfactor points allocated to each level Level 1 = 4 points Level 2 = 4 + 4 = 8 Level 3 = 8 + 4 = 12 Level 4 = 12 + 4 = 16 Level 5 = 16 + 4 = 20 Problem Solving Weights allocated to subfactors Complexity Problem Solving Points allocated to complexity 150 x 0.4 = 60 Points allocated to Problem Solving Number of levels for subfactor problem solving Assigned points to lowest level Subfactor weight x factor weight = lowest point value 0.6 x 0.1 = 6 points Problem solving subfactor points allocated to each level Level 1 = 6 points Level 2 = 6 + 6 = 12 Level 3 = 12 + 6 = 18

150 x 0.6 = 90 5

40% 60%

150 x 0.6 = 90 5

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Level 4 = 18 + 6 = 24 Level 5 = 24 + 6 = 30 Responsibility Supervising others Total points in job evaluation plan: Weight of the factor responsibility: Points assigned to responsibility: Weights allocated to subfactors Supervising others Accountability Points allocated to supervising others Points allocated to accountability Number of levels for subfactor supervising others Assigned points to lowest level Subfactor weight x factor weight = lowest point value 0.4 x 0.3 = 12 points Obs.: when the number of points is higher than expected, choose the most suitable points i.e.: (5) Supervising others subfactor points allocated to each level Level 1 = 5 points Level 2 = 5 + 5 = 10 Level 3 = 10 + 5 = 15 Level 4 = 15 + 5 = 20 Level 5 = 20 + 5 = 25 Level 6 = 25 + 5 = 30 Level 7 = 30+ 5 = 35 40% 60% 450 x 0.4 = 180 450 x 0.6 = 270 8 1,500 points 30% 1,500 x 0.3 = 450

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Level 8 = 35 + 5 = 40 Accountability Weights allocated to subfactors Supervising others Accountability Points allocated to supervising others Points allocated to accountability Number of levels for subfactor accountability Assigned points to lowest level Subfactor weight x factor weight = lowest point value 0.6 x 0.3 = 18 points Accountability subfactor points allocated to each level Level 1 = 18 points Level 2 = 18 + 33 = 51 Level 3 = 51 + 33 = 84 Level 4 = 84 +33 = 117 40% 60% 450 x 0.4 = 180 450 x 0.6 = 270 4

Working Conditions Censorial Effort Total points in job evaluation plan: Weight of the factor working conditions: Points assigned to working conditions: Weights allocated to subfactors Censorial effort Mental Effort 60% 40% 1,500 points 10% 1,500 x 0.1 = 150

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Points allocated to censorial effort Points allocated to mental effort Number of levels for subfactor censorial effort Assigned points to lowest level Subfactor weight x factor weight = lowest point value Censorial effort subfactor points allocated to each level 0.6 x 0.1 = 6 points Level 1 = 6 points Level 2 = 6 + 11 = 17 Level 3 = 17 + 11 = 28 Level 4 = 28 + 11 = 39 Mental effort Weights allocated to subfactors Censorial effort Mental Effort Points allocated to censorial effort Points allocated to mental effort Number of levels for subfactor mental effort Assigned points to lowest level Subfactor weight x factor weight = lowest point value Mental effort subfactor points allocated to each level 0.4 x 0.1 = 4 points Level 1 = 4 points Level 2 = 4 + 4 = 8 Level 3 = 8 + 4 = 12

150 x 0.6 = 90 150 x 0.4 = 60 4

60% 40% 150 x 0.6 = 90 150 x 0.4 = 60 5

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Level 4 = 12 + 4 = 16 Level 5 = 16 + 4 = 20 (Bergmann, 2001) Once the total of points is assigned to the job evaluation; it is necessary to determine the weight for each factor as shown above. The total points assigned to Zenith job evaluation are 1,500 points. Each factor weight is defined by level of relevant within the organization; for example, the factor skills weight more than any other factor because it is more relevant to the organization than any other factor, such as working conditions. Therefore it is assigned 50% of the total points 1,500 points for Zenith job evaluation. Each factor has two subfactors dividing according to its category. For the factor skills for example; there are two subfactors, which are education and experience. Therefore the weight given to each subfactor is based on the level of importance it has to Zenith Company such as education weight more than experience as shown. The points are assigned to each subfactor according to its relevance and followed a logical order to guarantee a fair distribution among the factors and subfactors. Therefore this method was adopted to ensure that the points were allocated in equally and consistently manner according to factors and subfactors importance and following a logical method by Bergmann. (Points allocation chart see appendix figure 1)

E. PAY FOR KNOWLEDGE [PFK]

Under a PFK compensation system, an employees base pay is dependent upon the accomplishment of skills. A PFK compensation strategy is also called competency based and skill based pay system sometimes depending on the situation/circumstances. Skill based pay is centered on the skills and capability of an individual employee. Competency based pay is centered on indirect measures of individual accomplishment acquired before or after employment1. (Atchison, Thomas W; Belcher, David W; Thomsen, J David; 2000-2010). Most of the study has been focused on skill-based pay while competency-based pay remains an unproven concept. The table on the next page is a thorough formulation of Pay for Knowledge for Zenith Medical Systems Incorporation.

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Pay For Knowledge - Skill Block Designation Data Input Resolve questions of program intent, data input, output requirements, and inclusion of internal checks and controls. Data Analysis Prepares detailed work flow charts and diagrams to illustrate sequence of steps that integrated program modules must follow and to describe input, output and logical operations involved, based on workflow charts and contract specifications. Code monitoring and testing Review the program testing process and ensure that program errors have been completely eliminated. Reviews program documentation and client instructions prepared by Intermediate Application Programmers. Synchronization

Level III Senior Applications Programmer $5000

May assist System Installation Department with preparations of client training material.

Level II Intermediate Applications Programmer $4000

Supervises entry of program codes into computer systems and inputting of test data.

Analyzes workflow charts and diagrams, applying knowledge of computer capabilities, subject matter, and symbolic logic.

Observes computer monitor to interpret program operating codes and to detect basic errors. Corrects computer errors by modifying program or altering sequence of program steps.

Receives from Senior Application Programmer a detailed workflow chart and diagram that illustrates sequence of steps that program must follow and describe input, output and logical operations involved, may also co-ordinate work of Junior Application Programmer to write, test and modify computer programs.

Level I Junior Applications Programmer $3000

Enters program codes into computer system. Input test data into computer.

Applies knowledge of computers capabilities, subject matter and symbolic logic to convert detailed logical flowchart to language processable to computer system.

Observes computer monitor to interpret program operating codes and to detect basic errors. Corrects computer errors by modifying program or altering sequence of program steps.

N/A

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Designation Systems Integration Specialist $4250 Level 0

Operations Develop application modules that will interface effectively to result in an efficient integrated system.

Analysis Interprets the contract specifications, and in conjunction with application programmers for each application modules and the necessary interfaces.

Testing Tests the system to make sure it fulfills contract specifications and integrated elements interface effectively

Resolutions Prepares recommended solutions to be implemented by the applications development departments.

Designation

Analysis

Development

Reviewing

Operations. Able to prepare workflow charts and diagrams to specify in detail operations to be performed by computer systems. Also able to prepare time and cost estimates for projects, along with proposal specifications and/or contract specifications.

System Design Analyst $3850 Level 0

Able to analyze client requirements, procedures, and problems to provide efficient computer solutions, also analyses current operational procedures, identify problems, and learn specific inputs and output requirements, such as forms of data input, how data is to be summarized and format for reports.

Able to write detailed description of user needs, program functions, and steps required to develop or modify computer systems.

Reviews computer system capabilities, workflow, and scheduling limitations to determine if requested program or program change is possible within existing system.

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Designation

Regional Marketing & Sales

Sales Forecasting, Budgeting and Specs development Prepares regional sales forecast. Ensures product meets customer needs, product specifications are well developed and costing is accurate. Ensures that budgeted sales level is accomplished. Prepares regional budget.

Client Negotiations Sets a price for products, which will contribute satisfactory profit margins and gets, involve negotiations over price or product design issues.

Regional Marketing Manager $4250 Level 0

Manage the marketing and sales of client systems for a given region.

Policies Evaluation and implantation Evaluates current policies, procedures and practices for achieving regional objectives and implements improved policies, procedures and practices.

Daily administration and employee management Selection, evaluation, coaching, promotion, transfer or discharge of systems marketing specialists and systems design analysts. Jointly oversees administration of regional office

Designation Systems Marketing Specialist $3000 Level 0

Analyzing Analyzing client needs and recommending appropriate computer solutions to clients.

Customer Management/Service Establishing and maintaining good working relationships with customers; disseminating promotions; setting up demonstration hardware and operating systems.

Troubleshooting Applications troubleshooting and maintaining customer satisfaction.

Specs development Assist Systems Design Analysts in developing specific systems specifications at the proposal stage and after signing of purchase contract.

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Works Cited
Bergmann, Scarpello T, and. Point Method of Job Evaluation in Compensation Decision Making. New York: Harcourt, 2001. "National Salary Data." Pay Scale. 4 Aug. 2011. 7 Jul. 2011. <http://www.payscale.com/research/US/Job=Human_Resources_%28HR%29_Officer/Salary>. Richard, Long J., and. Strategic Compensation in Canada. Saskatchewan: Thomson Nelson, 2005. Armstrong, Michael. Employee reward. London: Chartered Inst. of Personnel and Development, 2002.

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