In the world of pay

Characters of this Case:Company- Typware AG Ltd.

Renate Schmidt Head of HR Department.
Jrgen Mehr Typwares European head of Marketing.
Anne Prevost D i r e c t o r o f M a r k e t i n g , X o n Tec h n o l o g i e s . (Person to
be appointed)
Thomas CEO of the firm.
Rainer Barth Contact at the consulting firm
The case is about Typware AG Ltd. (German software giant) who wants to
increase their revenue in the international market by 10%, to do so they need a
highly qualified professional to help increase their international sales.

Anne Prevost, who engineered a huge uptick in sales nearly single handedly for American
company (Xon Technologies) that has been making penetration into Typware's markets, is
ready to jump ship--provided Typware makes her a good offer.
Jurgen Mehr is upset about the fact that the company is considering the American executives
demand of salary which is nearly same as of his in spite of the fact he knows that she is
excellent in her field of work.
Renate Schmidt is in dilemma of what to do regarding decision about the compensation
package for Anna Prevost as CEO Thomas want her in the organization in order to fulfil the
companys strategy to increase its revenue by 10%.
Now, after discussing with Rainer Barth her contact at the consulting firm she talked to
Anneto get answers of the questions of Rainer. Anne told about the benefits she expects and
also reminded that other good offers are also waiting for her. Once again Renate didnt get
any easy solution to this matter.
The reading compensation policy and organizational performance .the efficiency,
operational and financial implications of pay level and pay structure try to investigate the
relationship specifically how companies pay structures and pay levels relate to resource
efficiency and financial outcomes.
So according to the equity theory employees evaluate exchange relationships on the basis of
comparisons of their perceived ratios of inputs and outputs to the previewed ratios of others
inputs and outputs. Equity also suggests that that overly hierarchical pay structure can have
dysfunctional consequences which we can see in the case that Mr Mehr is displeased by the
fact Ms Anne is demanding same pay as compare to his pay. As the pay structure become
more hierarchical, organizational performance may be adversely affected as Mr Mehr can
become less cooperative and less inclined toward teamwork due the given situation of Ms
Anne.
If we analyse through the efficiency wage theory which relate pay levels to organizational
performance .in this theory the organizations with higher pay levels should experience
increase in both individual-level and organizational level efficiency. But in extreme case
there is chance financial performance will be lower with low pay levels and lower with high

pay levels. So thinking of providing the person with a higher package does not mean that
he/she will perform more and provide the organizational with good results. If we take the
situation in the case there is risk for the company as if they accept the salary package that Ms
Anne wanted will be converted into the effective and in a productive way in the terms of its
revenue as there are diminishing returns for pays effect on employees performance.