Case study
In this case, Renate and Jurgen Mehr, who is the head of marketing for Typeware, a German software giant, is conservative about the salary demands of an American executive they want to hire. The case illustrates tTypeware’s inability to come up with a fair compensation package for Ann Prevost. Renate Schmidt is Typeware’s Head of Human Resources, and she is faced with the dilemma of how much to offer Ann without destabilizing the mood of other employees in the company. Thomas is the CEO of Typeware, and according to him, Ann is a necessary strategic acquisition for the company. Ann Prevost is the American candidate that Jurgen most favors due to her high credentials in Typeware’s worldwide market. Currently, Ann is working as a marketing director in a US software company that is highly penetrating into Typeware’s market. Ann Prevost was the mastermind behind a huge uptick in sales for her company, and she is now willing to shift to another company provided a good offer is given to her. As a result of her skills in the market, Ann would be a good catch for any organization. Although Typeware might be interested in hiring her services, the salary demands are close to that of the company’s top managers. The company, Typeware, has been penetrating aggressively into international markets since 1960. There are consultants such as Rainer who helped in negotiating the compensation strategies for overseas employees, and their recommendation is that employees be offered variable standards depending on their location. However, it is becoming more complicated for individual expatriate packages. Renate is facing problematic issues such as the failure of the company to use a uniform pay scale and that many executives in the company have received extra salary rising up to 30% based on their geographical circumstances. Typeware needs to act fast in convincing Ann because she has another offer on the table.
From the case study titled “In a World of Pay,” there are various concepts present, and they relate to the concepts we have covered in chapters 1-5.of this course. The concept of Base pay, Merit/COLA, and Incentives that we studied in chapter one is unveiled when Jurgen argues that although Ann Prevost is good, the salary demand is too high. External competition affecting the internal payment structure of an organization that we studied in chapter three is also manifested in this case study when Renate explains that the organization is trying to match the stock options that Seistrand, who is a competitor, is offering to Ann. Factors that shape the internal pay structure in an organization that we studied in chapter 3 can also be related to the following paragraph in the case study: “But this salary request is for nearly as much as Jürgen himself makes. If we pay a person who is just coming into the com pay that much, it will make others who have been with us for a long time feel that we don’t care about them.” “Well, Renate, in this case, there is much to consider,” Thom as explained. “Prevost is probably trying to figure in differences in tax rates, inflation, benefits, floating currencies, and other item s. She probably has stock options and a bonus package that she would give up to come here. And, as you know, the United States does not have subsidized health care or educational support. That’s why they have very high salary expectations.”
Strategic decisions while designing the total compensation strategy in an organization can be related to Thomas’s statement in which he tells Schmidt that certain jobs are not ever going to follow the rules, especially a company in their position. Thomas tells Renate to come up with a salary and benefits recommendation that Ann Prevost can live with. Also, the consequences of an internal aligned structure that we studied in chapter 3 can be related to the paragraph where Renate is advised to consider Anne’s long-term relationship with Typeware while deciding to hire her.
This case study relates to issues that are related to compensation and benefits in an organization. From the details given in the case study, it is evident that Typeware has failed to update its compensation and benefits system, and this has resulted in an unstable situation in the company; this is showcased when the company wants to hire Ann Prevost. The company does not have a stipulated compensation and benefits program for its employees because if it were present, Schmidt would have used it as the guideline for the proposed new hire. Since the company’s pay system is irrational, it has resulted in a difficult salary system, making it hard to hire new personnel, especially those with special skills needed in the company. Typeware does not have performance management that can measure the employee’s performance at their workplace. A performance management system is useful in assessing the strengths and weaknesses of the employees. Therefore, Typeware should not have underestimated its value. The performance management system is also useful in developing employees who are effective in their jobs in any organization. In the case study, we are told that Typeware has ventured aggressively into the market since 1960; however, although the company has reaped huge benefits, it has taken no steps in trying to promote the development of its employees.
This case also relates to the importance of human resource activities in any organization in preventing issues such as payment instability. If the given organization had followed Human Resource activities, then it would not have experienced the dilemma that occurred while hiring the new employee.