Fundamentals of Management, 8th ed

Job Values Survey

Column 1 Your Ranking

Column 2 Employer Ranking

Working conditions

Working with people

Employee benefits

Challenge

Location of job

Self-development

Type of work

Job title

Training program

Advancement

Salary

Company reputation

Job security

Autonomy on the job

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Part 3: Organizing

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EXPERIENTIAL EXERCISE

Choosing a Compensation Strategy

Purpose:

This exercise helps you better understand

how internal and external market forces affect compen-

sation strategies.

Introduction:

Assume that you are the head of a

large academic department in a major research univer-

sity. Your salaries are a bit below external market

averages. For example, your assistant professors make

between $45,000 and $55,000 a year, your associate

professors make between $57,000 and $65,000 a year,

and your full professors make between $80,000 and

$90,000 a year.

Faculty who have been in your department for a

long time enjoy the work environment and appreciate

the low cost of living in the area. They know that they

are somewhat underpaid but have tended to regard the

advantages of being in your department as offsetting

this disadvantage. Recently, however, external market

forces have caused salaries for people in your field to

escalate rapidly. Unfortunately, although your univer-

sity acknowledges this problem, you have been told

that no additional funds will be provided to your

department.

You currently have four vacant positions that need

to be filled. One of these is at the rank of associate

professor, and the other three are at the rank of assis-

tant professor. You have surveyed other departments in

similar universities, and you realize that to hire the best

new assistant professors, you will need to offer at least

$60,000 a year and that to get a qualified associate pro-

fessor, you will need to pay at least $70,000. You have

been given the budget to hire new employees at more

competitive salaries but cannot do anything to raise the

salaries of faculty currently in your department. You

have identified the following options:

1.

You can hire new faculty from lower-quality

schools. They will likely accept salaries below

market rate.

2.

You can hire the best people available, pay market

salaries, and deal with internal inequities later.

3.

You can hire fewer new faculty, use the extra

money to boost the salaries of your current

faculty, and cut class offerings in the future.

Instructions:

Step 1: Working alone, decide how you will proceed.

Step 2: Form small groups with your classmates and

compare solutions.

Step 3: Identify the strengths and weaknesses of each

option.