Megalith case Study

SLIDES

Introduction to Megalith inc.

Manufacturer of printing equipments, publisher and suppliers of office equipments

After world war 2, it diversified into publishing

Company failed to compete IBM and Xerox.

John – VP Finance groupFrank – VP HR

Hay AssociatesINTRODUCTION

Introduction Of Hay Associates

Founded at Philadelphia in 1978 Leading company major focuses on

measuring job contents and providing HR solutions to businesses.

They providing services of issues related to: Strategic compensation Corporate culture Performance planning and its measurement Outplacement

Introduction Of Hay Associates

• Approach to solve issues: Understand organizational issues

and their corporate cultureThen develop design to solve it.

• They having Data base that hold all market and industrial data about salary practices. Helps them to check external equity.

Megalith And Hay Associates

Megalith issue: Valuable employees leave organization because of

bureaucratic salary system. They fails to develop good compensation system as they

do not understand how to access employees performance and talent.

Hay solutions: Measure internal equity based on job contents. Measure External equity After this they will be able to understand

each job its roles and accountability level Helps them to differentiate between best performer and

average performers. Based on job roles they can pay them.

Megalith Finance Group

In 1976 Whitefield, decided to focus more on the Megalith Finance group that’s why he appointed John Boyd as senior vice president for Finance

Finance Group will be responsible for end result in area of strategy, planning, policy and control.

Boyd had hired 630 employees which were previously 350.

Due to this huge expansion, he required new personnel who could respond to a challenge.

They design chart for rating jobs They revised there job description

Continued

Boyd hired four key people which performed beyond their imagination and expectations.

All four received every possible promotion, salary increase and incentive bonuses.

Boyd decided to drop two important person just due to not able to providing them proper benefits.

Edmund played a major role in retaining those competitive people by giving proposal of changing there compensation policy.

Expected Outcomes

Contribution towards corporate profit and growth. Provide timely and accurate information Awareness of financial result to top management Significant contribution to financial group

management continuity and competence. To provide effective management information

services To provide an effective integrate group operations

and evalutions.

Lonny and george

I THINK THAT EXCEPTIONS MUST BE MADE IN THE CASE OF BOTH THE TOP PERFORMING MANAGERS OF THE FIRM.

continued

The company should pay more to the high performing employees who have set a bechmark for others to follow them into their footsteps.

This increase in the pay of both the employees is directly related to their performance rather than their seniority or high positions within the company.

…………………

This can be a source of inspiration and motivation for other employees to work hard for the wellbeing of the company to be rewarded like both the managers.In this way the company performance as well as the interest of the employees will increase more when associated with a high pay.

………………. The thing which is of much significance for

the company is retai ing both the key players lonny and george due to the reason of their contribution and devotion as well as their knowledge, skills and abilities enthrusted within the company and its other members.

Doing so will eventually make the perception of the company to be performance oriented in terms of pay rather being dependent on other discriminating factors.

Assessment of Hay System of salary determination

Hay system  It is a scheme which is based on the "points factor"

approach.

It is based on comparative analysis of base salary and benefits and develop the job description

A description of the job is made including such things as: expertise required, accountabilities, experience required, functions performed, financial impact of the job, freedom to decide and act, number of staff supervised, pre-eminence of the position, influence of the position within the company etc.

It provides a systematic approach to relative job content measurement

components

In the Hay system there is a point score

for each of "Know How", "Problem Solving" and "Accountability". These factor points are then used to calculate a total "points factor" score for that job. This task is repeated for all jobs within the company.

Compensation is compared on the basis of job contents rather than job title

1. Knowhow:

Knowhow:

1. technical and practical knowledge

2. human relation skills basic (courtesy) intermediate (get along

well) critical (motivate people)

2. Problem solving:

Problem solving:

1. thinking environment(strictly routine to abstractly defined)

2. thinking challenge of the job(repetitive choice making to creative concept formation)

3.Accountability:

Accountability:

1. Position`s freedom to act(totally prescribed to unconstrained)

2. Impact on end result(indirect to direct)

3. dollar magnitude of area

Working of hay system in Megalith

Hay system help by giving information and an analysis of system`s strength and weaknesses and their suggestion for changing the system

Their numbers data showed Megalith`s current salary practice compared with the practice of broad industrial spectrum

assessment

We found out that hay system used three major factors for the salary determination which are knowhow, problem solving and accountability .they did not use experience which was very important factor for megalith as they don’t want to lose their experienced and capable finance manager

Strength of Hay SystemTopic No: 6

Strengths of Hay System

Understanding of relative accountabilities of all roles –

HQ, business, function and category

Clarify how matrix structures are (supposed to be) working

Establish clear, effective career paths, useful in

determining career moves and development programs

Design internally equitable pay structures

Strengths of Hay System (cont’d)

Meet requirements of ‘equal value’ legislation

Make accurate market competitiveness assessments

through ‘measured job-size’ surveys

Analyze job and organization design efficiency and

effectiveness

Determine the best job/person match.

Weaknesses Hay SystemTopic No: 5

Weaknesses• COMPLICATED SCORING MATRIX (TRANSPARENCY).

• EMPHASIS ON MANAGEMENT KNOW HOW.

• BIAS REFLECTS HIERARCHY AND BUDGET HOLDING.

• UNSUITED TO COLLEGIAL AND TEAM-BASED NATURE OF

EDUCATION SECTOR..

• IS NOT CONCERNED WITH HOW RESPONSIBILITIES ARRIVED AT –

SNAPSHOT SYSTEM.

• GENDER BIASNESS DISCRIMINATION.

• FINANCIAL ISSUES.

• ACCOUNTABILITY.

• RISK FACTOR.

• LACK OF COORDINATION.

Megalith, Inc. – Hay associates (B)

TOPIC NO: 7

Introduction

• Contain two exhibits

• Data based on 57 items

• Climate survey

• Questionnaires

• 48 employee ( 7 top managers , 41 other employees)

• Finance group

Exhibit 1

SHOWS RESPONSE OF SEVEN QUESTIONS

RESPONSES HAVE BEEN SCALED AS PERCENTILES

A)To what extent does the current reporting structure facilitate or hinder implementation of the organization strategies  greatly hinders 1 2 3 4 5 6 7 greatly facilitatesT= 72%G=62%

B) to what extent are people in this organization free to take independent actions that are necessary to carry out their duties   to A very great extent to A very little extentT=42%G=38%

C) to what extent are the goals in this organization truly challenging? To a very great extent to a very little extentT=22%G=48%

D) relative to it competition this organization is  A followerA pacesetterT=43%G=65%

E) Considering The Work You Do, How Would You Describe You Present Compensation? Very unsatisfactory Very satisfactory T=62%G=40% E1) In relation to your performance T=30%G=50% E2) in relation to others jobs of similar size and know how requirement within the organization T-65%G=60% E3) in relation to comparable jobs in other companies  T=60%G=50%

Exhibit 2

CLIMATE PROFILE BASED UPON ANSWERS TO ALL 57 QUESTION.

EIGHT DIMENSIONS CREATED BY MATHEMATICAL TECHNIQUE CALLED FACTOR ANALYSIS.

Dimensions

• ORGANIZATION CLARITY : STRUCTURES, FUNCTIONAL PATTERNS AND MANAGERIAL INTENTION

• DECISION MAKING STYLE: TIMELY, RATIONAL MANNER, LONG TERM EFFECT

• ORGANIZATIONAL INTEGRATION: SUBUNITS COOPERATE AND COMMUNICATE

• MANAGEMENT STYLE: OWN INTUITION, FEEL FREE, SUPPORT FROM HIGHER LEVEL

•PERFORMANCE ORIENTATION : INDIVIDUAL ACCOUNTABILITY FOR CLEARY DEFINE END RESULT , HIGH PERFORMANCE

•ORGANIZATION VITALITY: ORG. AS DYNAMIC ONE, INNOVATION OF ITS DECISIONS AND RESPONSIVENESS TO CHANGE CONDITIONS

•COMPENSATION: SYSTEM IS EQUITABLE , COMPETITIVE, RELATED TO PERFORMANCE

•HRM: INDIVIDUAL GETS OPPORTUNITIES WITHIN THE ORGANIZATION

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