You operate a small advertising agency.  You employ two secretaries, a graphic designer, three sales representatives, and an office coordinator.  What types of things would you consider when...

You operate a small advertising agency.  You employ two secretaries, a graphic designer, three sales representatives, and an office coordinator. 

  1. What types of things would you consider when determining how to compensate each position?  Describe two (2) considerations.
  2. What type of compensation plan would you use for each position?

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mwestwood | College Teacher | (Level 3) Distinguished Educator

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1. What types of things would you consider when determining how to compensate each position?

  • educational level
  • years of experience in the same field as applied for
  • salary
  • commission
  • sick leave/personal days
  • maternity/paternity leaves
  • workman's compensation and social security (required by law)
  • geological considerations (e.g. people in areas with high costs of living would be paid more than in areas that have lower costs of living)

2. What type of compensation plans would you use for each position?

  • For a small business owner, it would be cost-prohibitive to have health insurance for the employees, so they would need to be on the insurance plans of their spouses or sign up for Affordable Care.
    However, there could be a company comprehensive paid leave plan which would include vacation, sick days, maternity/paternity leaves, and immediate family member funeral leave. Perhaps, too, the employees could have two personal days of 50% pay.
    Based upon the profits of the company for the year, these benefits could increase (e.g. personal days could go to 100% pay or be increased a day, or more sick days added, etc.). In this way, all employees would be motivated to work diligently.
  • Salaries
    --The secretaries would be paid a salary commensurate with education and experience, and based upon an hourly wage at a competitive level with other such positions in small businesses in the area, along with some compensation for day care. If the employee has no children, then the hourly wage could be raised. With periodic reviews of work performance, bonuses could be awarded for attendance and efficient work, etc.
    --The office coordinator would be paid a salary commensurate with education and experience, and at a competitive level with similar positions in other small businesses. In addition, bonuses could be awarded based upon how well the coordinator communicates and relates to employees, and how efficiently the office operates. 
    --The graphic designer would be paid a salary commensurate with education and experience, and at the market value of designers in similar businesses of the same size. There would also be a monetary bonus for successful designs proportionate to the size of the contracts made with the companies who accept them.
    --The sales representatives would be paid salary + commission commensurate with education and experience, and ones that are equivalent to the market value in the same field and with the size of the company.
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