Family$-$owned Performance Plastics Products Company in Niagara Falls, Ontario was

recently purchased by a much larger company, Cambridge Plastics Ltd$.$ When the Human

Resources Director of Cambridge Plastics, Michelle Schwartz, reviewed Performance Plastics

Products compensation policies, she became concerned that some of them were

questionable and in some cases violated the law. When she asked the Plant Manager, an

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engineer, who also acts as the Human Resources Manager, how he determined pay rates,

the Plant Manager explained that he would ask applicants what they had earned in the

previous job and just add $25$ to $50\%$ to this amount, depending on their job experience. To

make matters worse, two recently hired visible minority machinists complained that they were

paid less for the same work than non$-$minority workers. The Machine Shop Supervisor

disputed their claim, asserting that the non$-$minority employees had more work experience

and deserved higher pay. Michelle also discovered that productivity in the subsidiary was

lower than in the other plants of Cambridge Plastics. A Human Resources Consultant was

hired to assess the compensation practices for Performance Plastics Products.

The key points of the Consultant$’$s report are summarized below:

$•$ Executives in the past have received an annual bonus determined by the owner at his

discretion.

$•$ Wages for hourly employees ranged from $$16\mathrm{.}00$ an hour for employees during their

probationary period to $$28\mathrm{.}00$ for the more skilled or experienced employees.

$•$ The amount of overtime paid by Performance Plastics Products was very modest;

overtime was paid for all hours over $180$ per month.

$•$ The wage rates for different workers varied widely even on the same job; those employees

who were not visible minorities receive approximately $18\%$ more than those who were.

$•$ Visible minority employees were paid $10$ to $20\%$ less in all job categories.

$•$ On highly technical jobs, the company paid a rate of $20\%$ above the prevailing wage rate

for these jobs. All other jobs were paid an average of $15\%$ below the prevailing rate.

$•$ Production workers were eligible for a $$200$ draw each month if there were no accidents

during the month.

$•$ Sales personnel were paid commission and received a $$200$ bonus for every new

customer.

$•$ Whenever sales went up $10\%,$ all hourly workers got a day off with pay or could work one

day at double the time rate.

$•$ Turnover averaged a modest $12\%.$ However, in technical jobs turnover was less than $2\%$;

in nontechnical jobs turnover was nearly $20\%.$

$•$ Absenteeism followed the same pattern.

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Part A $(10\%$ of Final Grade$)$:

Answer the following questions. Provide clear, concise answers that are supported with

information from the case study and course materials.

$1.$ a$.$ What laws were being violated? Be specific.

b$.$ Explain how the company$’$s compensation practices violated these laws.

$2.$ There are several problems with this compensation system.

a$.$ Identify and explain the problems with the following:

i$.$ Incentives for executives, production workers, salespeople, and hourly workers

ii$.$ Compensation paid to the workers

b$.$ How do these problems impact the company $($not just the employees$)?$

c$.$ What do these problems tell you about the company and its managerial strategy?

d$.$ Define the desired employee behaviours and describe how these behaviours can be

reinforced through compensation practices.

$3.$ Using the NOC or O$*$Net Online:

a$.$ Draft a position summary for either the Plant Manager or the Machine Shop

Supervisor.

b$.$ What factors will connect the job evaluation to establishing the pay structure?