1. Does Waterway’s current compensation system seem to fit the company’s strategy of aggressive growth and product innovation? How might it be changed to achieve a better fit?
2. Specifically, how would you gather the data and design a competitive compensation system for Waterway? Would your approach be different for hourly workers versus managers? Would you treat all managers equally?
3. How might nonfinancial incentives play a role in helping Waterway retain hourly shop workers? How can they help keep aggressive and ambitious professionals such as Lee and Jack?

Lee Carter and her husband, Jack Schiffer, became two of Waterway Industries most valuable managers almost by accident. But now, if the snatch of conversation CEO Cyrus Maher just overheard on his way to get coffee meant what he thought it did, he was in danger of losing the very people who’d contributed most to Waterway’s recent growth surge. Cyrus had met Lee and Jack, both paddling enthusiasts, when he was advisor to a university outing club. Lee had been majoring in marketing at the time, while Jack was studying engineering. He took a liking to the young couple and offered them part-time work at Waterways, then a small manufacturer of high-quality canoes in upstate New York. After graduation, the newlyweds decided to stay on full-time and take a breather before launching their demanding professional careers. That was 10 years ago.