Show Me the Money Compensation at CEL Case Solution

This increases fairness among CEL engineers and motivates them to contribute to the company's success. A pay structure audit is an excellent technique to ensure that payment systems and compensation rules are consistent. Salary benchmarking may be used by an employer to compare industry and engineering pay trends. Making the structure visible to employees, management, and human resource specialists will assist in managing impending changes. Employers must determine whether to phase in or phase out the new payment arrangements gradually.

A modest compensation structure motivates and values employees, which reduces job hopping. Engineers are more likely to stay loyal to an organisation if they are satisfied with their work and have their financial demands met. Compensation structures that are competitive attract the best employees, preventing them from defecting to rivals. Increased compensation for all engineers adds to work pressure and stress, as well as worries about favouritism, squandered time and resources, and communication breakdowns. Some workers may get increases as a result of a positive connection with the company, while others may receive lesser rises as a result of a negative relationship.

2. Introduction

In 2018, the management of Cisca Engineering Ltd. (CEL), a small engineering business in Waterloo, Ontario, faced a difficult dilemma on whether to spend above their typical pay bracket in order to employ a mechanical engineering candidate they desired. The business was having difficulty attracting top personnel due to the perception that its usual basic pay capabilities were lower than those of bigger organisations. The firm president considered the trade-offs and assessed the possible impact on general staff morale against the benefits of hiring a needed new employee. Should he give the applicant a reduced pay in exchange for the pipe stress analyst post and risk being rejected? Should he provide the candidate's desired wage and risk offending his other workers if they learn of it? Should he restructure his compensation structure and raise the pay scales for all of the company's engineers? 

3. Case Findings

The firm's president weighed the trade-offs and the potential influence on general staff morale against the advantages of recruiting a necessary new employee. The firm needs a technical specialist like Grubb, but the candidate's compensation demands range from CA$90,000 to $110,000, but the company can only afford to offer him an entry-level salary of $85,000 given his expertise (Exhibit 1).

According to a poll performed by the Canadian organisation of intermediate engineers, CEL established a lower benchmark compensation for its engineers (Exhibit 2). While workers earn a portion of their profit sharing in addition to their compensation, some CEL employees would have preferred a greater salary. Because their profit sharing income is not predictable; it is constantly contingent on the company's success.

According to Arvidson's casual conversations with his CEL workers, they are unaware of the awards and privileges they have gotten from the firm. While some are aware, they tend to forget at some point. This demonstrates that the overview of their incentive system provided to their workers as a form of awareness is ineffective for them.

4. Evaluation of Alternative Solutions

Jeff Arvidson, president of Cisca Engineering Ltd. (CEL), is faced with three potential issues about the entrance of Ron Grubb, a highly qualified candidate for the post. To do this, he must weigh the probable consequences of each situation in light of all other variables. Each choice contains a set of advantages and disadvantages that he must weigh in order to reach a conclusion about the induction dilemma. The following are the inquiries:

i. Should he offer Grubb the job at a lower salary and take the chance of being turned down (D. Risavy et al., 2019)? 

If Arvidson makes this choice, Grubb may decline the position. Because Grubb is unquestionably aware of his importance as a mechanical engineer with extensive expertise in the pipe stress analysis sector. At the same hand, this is a missed opportunity for the CEL firm, since Grubb's abilities and experience might aid the company in its expansion plans. On the other hand, the CEL may maintain the current internal alignment and compensation structure and focus on developing a competency-based culture. The choice not to induct Grubb will strengthen the relationship between management and workers, who will consider it as fair. One significant issue is that organisational capabilities based on human capital are difficult to reproduce, which will be avoided in this scenario.