Dear Course Participants

Re: Request for Information: Compensation Plan Design

A-Z Fulfillment Services Inc. was established in 2017 and provides call centre and warehousing and logistic services for fifteen organizations that sell products through infomercials. Although "As Seen on TV" and "Time-Life" are not our clients, we do service a number of organizations whose products you may recognize. We are a privately-owned company with a revenue of $150 million annually. We have 300 employees, all located at our main office/plant in Anytown. Our organization is a non-union enterprise.

Founded on the belief that our organization's success is contingent upon our ability to service a high-volume business at a high level of accuracy, we actively solicit the input of our team members to find improvements. We also believe that our clients will return to us if we are able to provide excellent service to their customers.

We expect our revenue to grow by only 1% at best and revenues are expected to remain flat until post pre-pandemic. The impact of COVID has significantly reduced net income. A key success factor has been the ability to continue to expand our services to new and existing clients.

We recognize that in order to sustain growth post pandemic that our reward plan must be able to attract and retain people with relevant industry experience and a desire to continue to develop processes that will lead to increased efficiency and productivity. As another outcome, we would like to introduce reward strategies and pay processes which will improve employee perceptions of equity in pay practices. We are looking to select a group to assist us with designing and implementing a new compensation plan and hence, have sent out this RFI.

Our present cash compensation strategy is not formalized and could be characterized as "ad hoc". We do not have a human resources department to oversee our compensation practices, so compensation is overseen by our 2^nd level Managers with a second-signature signoff required from the General Manager when an increase is recommended. Typically increases are granted once per year in November, when we do our performance reviews.

Our entry-level employees are paid on either an hourly or salaried basis (depending upon whether or not they are full-time), with spot bonuses given at management discretion for those that meet certain objectives. A salary range has been identified for each position, and is tested to basic market indicators each year. The company does not utilize job descriptions. Our sales force is paid on a base plus commission basis. (40-60). Although we do not have a formal compensation strategy, our overall retention rate is better than industry average at 17% per year.

The scope of the project includes developing a reward system for all hourly, non-managerial salaried employees, sales commission employees, front-line supervisory, and first-level managerial employees.

Specifically, we are looking for both an identification of the pay approach(es) that you would recommend to an employer that is similar to us, as well as a summary of the implementation plan of the approach you like best. We would like a list of the approaches you considered and why those approaches were discounted.

Integration of core knowledge to the facts in the question are essential

In particular, our questions are:

5. Specifically, describe the steps/process you would recommend to help us determine the number of levels and organizational bands needed for our business. (6 marks)

6. Describe the process you would take to determine if our sales compensation plan is competitive and effective. (4 marks)

7. Based upon our company profile, would you recommend that we include an incentive for non-sales professionals? If yes, what style, describe it, and explain why you believe it would be appropriate to include? If no, explain why not. (3 marks)

8. Provide an indication of how, once established, the reward strategy would be maintained administratively and technically (e.g. what kind of staffing and expertise would be required, what kind of training and roll out would be required). (4 marks)