Compensation Plan

Compensation plan

JB Socks intends to provide a very generous compensation plan for its marketing manager because his role would play a very important part in the growth of our company. Also Lewellen & Huntsman (1970) found strong positive correlation between compensation and profits (especially at the managerial levle).

Direct Financial Plans:

The manager would be given a base salary in the range of 3-5 lacs Rps, basically the board of directors would be provided with a detail survey of the pay ranges and job evaluation (we intend to take help of govt agency). Furthermore keeping in mind the size of the company, responsibilities and complexity of the job final pay would be decided. However we intend to make sure that our base salaries our above market average, so that we do not lose our valuable employees to our competitors. The manager would also be entitled to an annual salary raise of 10% irrespective of the fact whether the company makes a profit or not. A bonus of 10% would also be awarded based on his performance. Since his performance is a subset of company’s performance, so we have decided that a bonus would only be awarded when the firm makes a profit. Another portion of the variable pay would appear in the form of Profit sharing. To be precise the manager would be set some explicit goals at the start of the year (such as the goals set in the last assignment). If that goal is successfully achieved the manager would be awarded 15% of the profit made through that venture.

Indirect Financial Plans

The manger would be provided with 4 weeks of paid holidays while a maximum of 10 sick holidays (also paid). While all the holidays that are not used will be purchased back at the end of the year. Employees at the managerial level give a lot of importance to health and pension benefits. Therefore the manager and his spouse would be provided with health benefits where the company would be liable to pay half of the medical bills, because full coverage...