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Group 4 Co, dela Cruz, San Juan, Sia, Simeon, Tai, Tan BA 101 Masterprint, Inc. I. Point of View This case will be evaluated from an external consultant's point of view.

II. Problem How can Henry Villanueva (1) determine the most equitable employee salary and allowance compensation, and (2) implement this change in a way that will avoid further aggravation of employee dissent?

III. Areas of Consideration a. There is growing dissent among employees because they feel that the allowance policies of Masterprint is questionable. b. Employee dissatisfaction can adversely affect worker productivity and motivation c. The grant of allowances to employees is a private arrangement entered into by the company with selected employees for varied reasons. d. The proposed allowance changes can be implemented on November 1, when the new minimum wage increase becomes effective. e. A reduction in allowances may cause some employees to resign or protest (which may lead to labor strikes) f. The processes involved in printing involve different levels/types of skills. For example, typesetting and layouting and stripping need high skill levels(and therefore lots of training), as opposed to delivering the products to clients.

IV. Assumptions a. When Masterprint implements a change in policy, some dissatisfaction will still be present. The company cannot please everyone, and thus must choose the policy with the least negative repercussions. b. The failure of Mr. Henry Villanueva to justify the salary allowances differentials diminishes the credibility of management. c. The compensation of an employee is directly determined by his ability to generate profits and reduce costs for the company. Hence, the employees with the highest pay are those who contribute the most profit to the company.

V. Alternative Courses of Actions and Evaluation

Advantages 1. Start with a base pay for each position (taking into consideration the new wage rate), then reevaluate bonuses and award them based on: a. loyalty / length of years in the company This easily verified and measured. This allows Henry Villanueva to reward employees such as Felipe Crisol, the company driver, who have been serving the company for many years but do not necessarily have special/technical skills that are of special value to the company.

Disadvantages

There is no reward for having experience or special skills learned in other companies or in school, so highly skilled employees such as Manuel Gomez (the Typesetting Machine Operator) may resign. There is no incentive for people to take on additional responsibilities. There is no incentive for people to work more

efficiently. b. experience / educational background This can be easily verified and measured. This mechanism rewards skill so the company will be able to attract skilled and efficient workers. Workers such as Felipe Crisol (low skill level, but has been in the company for a while) might feel underappreciated. There is no incentive for people to take on additional responsibilities. There is no incentive for people to work more efficiently. It is not easily verified or measured because it is difficult to determine. There is no reward for having experience or special skills learned in other companies or in school (highly skilled workers may resign). Workers that have been in the company for a long time might feel underappreciated. There is no incentive for people to work more efficiently. This is not easily verified or measured. There is no reward for having experience or special skills learned in other companies or in school (highly skilled workers may resign). Workers who have been in the company for a long time might feel underappreciated. There is no incentive for people to take on additional responsibilities. This is not easily verified or measured. There is no reward for

There is incentive for people to take on additional responsibilities.

c. extra tasks or responsibilities that employees undertake (like teaching new employees, overtime hours, etc)

d. performance

There is incentive for people to work more efficiently.

e. good conduct

This may prevent incidents such as the fight that occured on October 4 in

the beerhouse near the printing plant. This provides a good system for "punishing" employees who violate rules without having to suspend workers (which also reduces the company's efficiency). This gives the employees incentive to work better (since they will be competing with others for the promotion). Since there are already informally designated supervisors, selecting supervisors will be easy and there will be no need for a transition period. Allowances are not taxable. The company can bargain with suppliers/vendors such that the benefits will cost less than what the workers would have paid for it themselves. It might discourage envy since there is no cash amount that can be compared with others.

having experience or special skills learned in other companies or in school (highly skilled workers may resign). Workers who have been in the company for a long time might feel underappreciated. There is no incentive for people to take on additional responsibilities. The company will need to hire more people since skilled people will be moved up to supervisory positions. Given the new wage rate, the company might incur huge additional costs from this.

2. Add supervisory positions to eliminate the need for allowances and just give salary increases based on hierarchy.

3. Give non-cash allowances instead of cash allowances (grocery allowances, gifts baskets, etc.).

Company might incur additional costs in delivering or distributing these items to employees (since these materials are not as easily transferable as cash), and as well as in accounting for purchasing these items (a department will have to keep track of receipts).

VI. Recommendation The group proposes that Masterprint Inc. must formalize and implement a set of standards as a basis for allowance grants, effective November 1. These standards must be objective and measurable, such as (1) loyalty/length of years in the company, (2) experience, (3) educational background, (4) additional tasks/service, (5) performance, and (6) good conduct. For management to accurately evaluate each employee based on the proposed standards, the company must conduct periodic performance appraisals.

In order to implement these changes in a way that would avoid further aggravation, Masterprint must call a general meeting, where the change in policy must be thoroughly explained. By doing this, the management will send a message that they are firm and objective with regard to employee evaluation. Furthermore, there must be transparency in terms of the distribution of allowances, as to prevent any under-the-table favoritism. Aside from being a means to determine commensurate compensation, a formalized set of standards can serve as motivation for employees, given there is a well-defined reward system. Although there may be an element of resistance to the proposed changes, the group feels that the long-term benefits (more commensurate compensation and motivation) outweigh the short-term setbacks.