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Running Head: FINAL PROJECT MILESTONE 1, 2, 3, & 4 Final Project Milestone 1, 2, 3, & 4 Erin Pritchard Southern New Hampshire University

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Executive Summary E-Sonic has decided to enter a new phase in marketing their music to the public and realized that they are strong in contacts, customers, and music assortments, yet they need an outside influence for marketing and software solutions. The objective of this project is to prepare e-Sonic with a strategic plan for compensating their employees and leading them to attract and retain top talent in their market. E-Sonic is entering the market against many large and small firms that offer the same online sales of instant music but wants to stand out from the rest whilst focusing on customer care, production, employee fulfillment, and remaining true to the firm’s values and mission (Martocchio, 2015). During this project, the main objectives and findings were a deep analysis and strategies used to create a successful compensation plan. To create an effective plan analyzing external influences such as the economic landscape, competition, technology, consumer tastes, and the regulatory environment that can affect e-Sonic’s success. The industry profile through NAICS, provides e-Sonic a means to measure and classify economic activity (SICCODE, 2019). By having a code that identifies the type of business e-Sonic will be listed under. Examining the competition in the United States as well as internationally, will also benefit the firm by helping them become aware of what e-Sonic will be up against. Conducting the proper labor-market assessment and paying close attention to their internal, functional, and human resource capabilities will further ensure e-Sonic’s success in the record industry as well as their company’s future stability (Martocchio, 2015). The next major step in creating a detailed and efficient plan is to design a successful pay methodology. Creating jobs from benchmark jobs, job descriptions, and job structures, using a point evaluation method whilst taking coampensable factors and factor degree statements into

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consideration. Determining Proper Weights for compensable factors and calculating points will determine the appropriate pay-policy mix. Pay policy level decisions will be made based on job structures and the skills required to do those job. Using merit-based pay systems will be what e- Sonic will use especially if they want to reward employees based on their performance. Once all the jobs are separated and their points are distributed the reconciliation of those pay grades, salaries, and job duties can be seen (Martocchio, 2015). Furthermore, by using external competitiveness by comparing e-Sonic to other firms in their field, in conjunction with a compensation survey that will compare data e-Sonic will have a stabile foundation formed to represent fair compensation. Implementation of the new system will be next, and interpretation of the results will be conducted. The proper software developed for calculating the job evaluation points and the pay values can be used to run a regression and will do all the calculating for the analyses for each job structure. Each section of this analysis builds and depends on each other to create a solid foundation for e-Sonic to measure their success in the competitive market, provide fair, proper, and legal wages, benefits and competitive compensation. All factors must be taken in consideration, used, annually updated, and maintained to ensure the proper talent is being recruited, offered compensation that reflect e- Sonic’s values, and retain the valuable employees needed to remain successful (Martocchio, 2015). Strategic Analysis Sonic Records has been a successful and reputable company in the music industry for 30 years. Sonic Records has totaled over 15 billion dollars in revenue just 5 years ago, proving their long-term success. However, in the last few years the decline in sales of music CD’s has caused Sonic Records to re-evaluate their business strategy. Learning that people were burning their

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CD’s and downloading them illegally, they realized their company’s sales were plummeting and change was needed to take their firm into the future successfully. Sonic Records conducted research and learned that a computer company’s online music store has sold millions of songs in 6 days’ time. Therefore, the idea of eSonic was born and the company plans to merge into the ecommerce world of online business sales of music (Barcelona & Martocchio, 2015). Since Sonic Records has already established a reputable company, it will help them ease into the ecommerce-based business despite their already successful music competitors. ESonic’s mission is to be one of the top digital music companies worldwide (Barcelona & Martocchio, 2015). Esonic, having very little experience in creating an online website or software development, will have to hire employees that specialize in that field if they plan to succeed. They will need a team of employees that are versed in business, focusing particularly on technical skills and marketing to build a strong ecommerce contender in the digital record industry (Barcelona & Martocchio, 2015). Furthermore, eSonic will need to investigate the industry and how they compare to other companies both nationally and internationally. Creating a strategic compensation system will aide in the firm’s mission to succeed (Barcelona & Martocchio, 2015). External Environment Whilst examining the external environment of any business, it is important to examine the outside influences that can affect its overall revenue and success (i.e.) the economic landscape, competition, technology, consumer tastes, and the regulatory environment (Gartenstein, 2018). Esonic will need to carefully consider all five of these facets that compose their economic environment if they expect to be successful in their venture into the digital music industry. Since, Sonic Records understands the music industry and what it takes to succeed, the

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technological venture of the digital world will be a new addition and understanding their external environment is key to move forward. The first thing to consider would be the economic landscape of eSonic’s targeted audience. “Your external economic environment determines whether people have money to spend and how willing they are to spend it” (Gartenstein, 2018). When times are economically hard people tend to hang on to their money more than when the economy is perceived as optimistically productive (Gartenstein, 2018). Since eSonic’s targeted customer base is worldwide, it would be beneficial to obtain some basic knowledge of the economy. Secondly, eSonic should obtain a great understanding of their competition by knowing who they are and what they offer to consumers. Furthermore, by knowing exactly what the consumer wants from a music retailer, it will aide eSonic in providing their customers satisfaction. In addition, knowledge of the regulatory environment of the laws of what eSonic can and cannot do, is imperative to success. Lastly, knowing the technology that entails digital music sales will be a vital aspect for eSonic and will require the proper team of experts to proceed into the market. Industry Profile NAICS, (The North American Industry Classification System), provides businesses and governments a means to measure and classify economic activity (SICCODE, 2019). NAICS is currently used in the United States, Canada, Mexico, and federal statistical agencies to provide a 6-digit code system to classify individual business locations (SICCODE, 2019). “NAICS organizes establishments into industries according to the similarity in the processes used to produce goods or services” (SICCODE, 2019). Sonic Records and eSonic fall under the category as Music Publishers with the given NAICS Code of 512230 (SICCODE, 2019). “It is the first economic classification system to be constructed based on a single economic concept. Economic

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units that use like processes to produce goods or services are grouped together and the system is hierarchical with more broad industries at the top of the numerical range” (Boeninger, 2010). Competition Economic competition is of great importance in any firm that is offering a service or something to sell. The music industry is no exception and eSonic will benefit greatly by studying their competition. Since there are several companies in the digital music industry, eSonic is not a monopoly and cannot solely rely on Sonic Records’ well-established name for success. “Competition in the market is very important for the growth of the market and innovation in the market.” (Rajpurohit, 2016). Competition is also great for consumers because they can shop around to try and get the most for their money/experience. ESonic will need to remain competitive so they will need to investigate other ecommerce companies in their same field (i.e.) Amazon music, Napster, and Apple iTunes. Companies such as Amazon, set the historical precedence in the history of ecommerce businesses and should be viewed as serious contenders in digital music sales. “Amazon.com, Inc. is one of the most famous ecommerce companies and is located in Seattle, Washington (USA). It was founded in 1994 by Jeff Bezos and was one of the first American ecommerce companies to sell products over the Internet” (Ecommerce-Land, 2004). Amazon offers many different types of sales and services besides music, so eSonic needs to offer their audience something that will set them apart from their competition; something that will make the customers want to come back for more. “Launched in the US in 2014 and the UK in 2015, Amazon Music is the retail giant's streaming service that comes bundled with Amazon Prime” (Trenholm, 2016). Amazon music’s database is not as large as Spotify or Apple’s database so knowing this can help eSonic by being able to offer consumers more of a selection (Trenholm, 2016).

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Napster is another digital music sales company that offers over 30 million songs that are ad free. Napster has an extensive music database. “Napster’s leading streaming music services give members ad-free access to millions of songs. Whether they're listening on their phone, at home, at work, or in the car, Napster goes where they go” (Napster, 2019). However, Napster is similar to Spotify because even though their database is extensive, most of those songs are never even played. “Spotify, the largest subscription music service, offers 30 million tracks but admits that millions have never been played” (Trenholm, 2016). Another contender that eSonic will be in competition with is Apple iTunes. “Apple Music has over 50 million subscribers, making it the largest music streaming service in the United States. Spotify still holds the lead worldwide” (Wollerton, 2018). Apple has now launched a way for consumers to listen to their Apple music through the Alexa enabled smart speaker (Wollerton, 2018). “Though Spotify remains the biggest streaming service by both listeners and subscribers, Apple Music has benefited from the popularity of the iPhone to recruit new members” (Solsman, 2018). Apple CEO, Tim Cook said, “Apple Music hit 40 million total subscribers this year” (Solsman, 2018). While examining all these digital music moguls, eSonic has much to consider about how they want to approach the ecommerce industry and what they want to offer their customers. With knowledge of eSonic’s competitors they now have means to cater to a specific audience and offer those customers items and services that will set them apart. Foreign Demand Foreign demand for web-based music outside of the United States is a growing outlet for the digital music industry. It is a well-known fact that the United States is the largest and most prominent contender within the digital music market. “The music industry generated around 51. billion U.S. dollars globally in 2018, with around 19.6 billion of that coming from the U.S.

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alone” (Statista, 2019). However, several other countries are starting to gain sizable influence, so the digital music industry is growing leaps and bounds (Statista, 2019). Streaming is becoming the new digital upload, online radio, and live concerts are also gaining popularity. “Forecasts predict streaming revenues to continue to grow in the coming years, with digital music revenue from streaming in the U.S. expected to reach nearly 8 billion U.S. dollars by 2022” (Statista, 2019). However, the key international contenders are APAC (Asia and Pacific), EMEA (Europe, Middle East and Africa), Latin America, and North America and statistics show promising growth from 2015-2019 (Technavio, 2007-2019). “Technavio, a market research company that covers sectors ranging from healthcare to aerospace, believes global annual digital revenues will nearly double to $16.02 billion in 2019 from $8.10 last year -- a cumulative annual growth rate of 14.61 percent” (Peoples, 2015). Based on the Technavio report, now is a great time for eSonic to begin in the industry. Sonic Records already has a great reputation in the music world with over 30years experience so their connections will come in handy to gain significant momentum not only in the United States, but internationally as well. Long-Term Industry Prospects The long-term industry prospects are much like it has been for the last decade; erratic. The ecommerce music industry has had its fair share of unpredictable outcomes mainly because of developing technology. Consumers have gone from vinyl records to cassettes, to CDs (Compact Discs), to digital downloads, and now the new contender is streaming. Each advancement has progressed based solely on the technology created and, on the consumers, demands. “The music business has been in continuous upheaval and internal struggle for the past decade, and all the noise has long threatened to drown out any melody. Still, this moment offers

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something new, an inflection point of importance—if you know how to deconstruct it” (Ringen, 2015). Learning from the instability from the times of CDs to the shift of digital downloads, streaming is the new kid on the block and eSonic and its competition are in the phase of change once again (Ringen, 2015). However, one thing is for certain and that is people still have a love for music and a need to listen to it. Therefore, the only long-term industry prospects that music industry can depend on is that they can sell music as long as they keep up with the how and what of their audience’s desires (Statista, 2019). Labor-Market Assessment Economic trends can have an influence on commercial activity, (i.e.), “interest rates, inflation, unemployment levels, energy availability, and disposable income” (Olsen, 2019). These trends can be studied, and the knowledge obtained can benefit any organization that takes the time to conduct the analysis. Mercy Corps, (2015), defines a labor market assessment as, “Labor market assessments uncover important employer behaviors and needs, but also seek to understand the larger employment ecosystem” (Mercy Corps, 2015). According to the United States Census Bureau, under Geography Area Series: County Business Patterns, in 2014 there were 734 music producer establishments and 5,999 paid employees. In 2016, there were 705 music producer establishments and 5,161 paid employees (Census.gov, 2016). Although there was a decline in music producer establishments, as well as the number of paid employees, the annual payroll was approximately 20,000 dollars more in 2016 than 2014 (Census.gov, 2016). The U.S. county business patterns teach us that employees in the music producer industry are making more money and can make a living in this field. Unemployment in the U.S. is great

concern so learning that the music industry can offer jobs and help boost the economy is fantastic news. “Unemployment and the lack of sustainable livelihoods plague much of the developing world” (Mercy Corps, 2015). Furthermore, eSonic learns that there are approximately 700 plus competitors in this field so the market can be penetrated, and it shows possible success can be ascertained (Census.gov, 2016). Having the proper staff will be eSonic’s top priority and to attract and retain the right employees to fit the firm for success. By taking the time to find out exactly who eSonic hires to do the best job in each department will ensure future success of the company. Internal Capabilities Internal capabilities are the inside influences that can help or hurt any organization, (i.e.), staff, money, and culture are just some factors that contribute to these influences (Sherman, 2018). “Organizational capabilities are key intangible assets that make a significant difference when it comes to market value. Organizational capabilities are stable over time and more difficult to copy than other competitive advantages like product strategy or technology” (Lagor, 2004). Conducting a capabilities audit can show eSonic how they measure up and how to develop further on their intangible strengths (Lagor, 2004). “Organizational capabilities arise when a company delivers on the combined competencies and abilities of its individuals” (Lagor, 2004). ESonic needs to assess its company by figuring out what they do best, what are the firm’s resources, what are their capabilities/functions, and what are the firm’s best practices (Olsen, 2019). Conducting a capabilities audit can help develop eSonic’s assessment and steer them in the right direction. Having a positive company culture and staff is extremely important factors in achieving success. ESonic can follow Ulrich and Smallwood’s 11 capabilities of a firm to keep

them on the right track. These 11 capabilities are as followed: Talent, speed, shared mind-set and coherent brand identity, accountability, collaboration, learning, leadership, customer connectivity, strategic unity, innovation, and efficiency (Lagor, 2004). In addition, eSonic should first identify which section of the business to audit, create the content desired, gather data, synthesis data, and create an action plan (Lagor, 2004). Functional Capabilities The functional capabilities at eSonic are attributed to their 30 years of experience, the company’s resources, the data and customer base, software and technology, and marketing (Barcelona & Martocchio, 2015). The employees of eSonic will be the administrators for each of the operating aspects that are the functions that keep the firm working efficiently. The employees’ capabilities need to be evaluated and monitored to assure they can perform their individual jobs at optimal levels. Once eSonic has insured the right people are placed in the right positions that will provide the best job, they can rest assured that productivity will be optimal and beneficial to all aspects of the company. Human Resources Capabilities The Human Resources (HR) capabilities are an extremely important function in any successful organization. The public sector commission defines “the capabilities that the HR function must develop to build its internal capability and be recognized as a source of expertise and guidance to the public sector. It is the also the basis on which the capabilities for the individual practitioner are defined” (Public Sector Commission, 2014). By establishing the importance of HR, eSonic will benefit by providing directors and managers a common language to converse with their company, positive relationships can form, and the proper culture can be

acquired. HR’s capabilities will also provide strategic alignment, credible influence, professional expertise, and set clear performance standards for eSonic (Public Sector Commission, 2014). Job Descriptions Job descriptions are an important factor when creating or posting a job opening and should be detailed in nature to reveal the accurate summary of the important tasks, activities, criteria, and set skills for a position. “An effective job description will provide enough detail for candidates to determine if they’re qualified for the position.” “A job description should include important company details — company mission, culture and any benefits it provides to employees. It may also specify to whom the position reports and salary range” (Indeed, 2019, pg. 1). A detailed job description facilitates both the company posting the job, as well as the person looking to fill that position. The company can benefit from the detailed job description by narrowing down candidates that actually fit the position from those that do not. The job seeker can benefit from a detailed job description because they will be provided information about the company, their mission/vision, and exactly what job duties they will be responsible for. The more information provided, the better for all parties involved. The better the fit, the better the chance of retention. The four jobs chosen for this job analysis at eSonic Records are Marketing Director, Director of Software Development, Director of Customer Service, and the Artist Relationship Manager. The reason I chose these particular jobs to analyze is because they all seemed important positions that required the most responsibilities in each division from the list provided. Another reason I chose these jobs is because they all had an interesting appeal and I wanted to learn more about them.

To begin a successful job description several contemplative elements should be included. According to, (Indeed, 2019), several factors that should be included are as followed: make your job titles specific, avoid internal lingo that may confuse the job seeker, open with a strong, attention-grabbing summary, hook your reader with details about what makes your company unique, Include an exact job location, outline the core responsibilities of the position, highlight the day-to-day activities of the position, specify how the position fits into the organization, include a list of hard and soft skills, and keep your list concise (Indeed, 2019). The more attractive, attention grabbing, and thorough yet concise job descriptions get the most wanted applicants. Job Structures Job structures are defined as, “the basic overall hierarchy that a business uses to manage the reporting structure for each of the positions within the company” (Reference, 2019). The job evaluation process requires a job structure that can list a cadre of jobs and working relationships within the job hierarchy that can answer and connect to each other in the same firm. Rice University has created a job structure that eSonic can benefit from using. (See Appendix 2, Figure 1). “Rice’s job structure is a system which organizes jobs into groups that share common functional responsibilities and similar types of education, experience, and skill requirements” (Rice, 2019). The structure is divided into four sections which are, job family, job subfamily, job category, and job level. Then each of those sections divide off into individual contributors and job management levels (Rice, 2019). This helps break down the hierarchy into useful measures to better understand each position, its function/s, and rank so proper job duties are defined and the adequate pay rate is applied.

Point Evaluation Method Benchmark Jobs Benchmarking jobs is the first task to tackle using the point evaluation method. “Benchmarking is the process of comparing your results to peers in your industry. It is an essential business activity that is key to understanding competitive advantages and disadvantages” (Spacey, 2016). A benchmark job has several characteristics that have a clear definition and are similar among departments and organizations holding the same title. “Companies that collect job statistics usually have ample information about benchmark jobs available. This includes survey data that contains self-reporting on job responsibilities, salaries, benefits, and other information” (Wise Geek, 2003-2019). Benchmark jobs help both the employer and the employee because both can use them as a measurement to ensure proper pay is being distributed for the required job duties. Compensable Factors Determining the elements of job’s compensable factors is an important step to developing a correct category and pay scale. The definition of compensable factors is a, “common element of different jobs (such as hours worked, or number of goods produced) on the basis of which remuneration of the employees may be computed” (Business Dictionary, 2019). “A set of compensable factors are identified as establishing the value of jobs. Usually, the compensable factors comprise of the main categories of skill, responsibilities, effort, and working conditions” (HR-guide, 2015). Each main category can be broken down even further. For example, under skill, we can list experience, education, and ability. Responsibilities can list, fiscal and

supervisory. Under effort lists, mental and physical. Finally, listed under working conditions, location, hazards, and extremes in environment (HR-guide, 2015). Factor Degree Statements The e-Sonic factor degree statements are focused the compensable factors comprising of skill, mental, physical, responsibility, and working conditions. Since e-Sonic wants its employees to be the top in their field, they need to be knowledgeable, responsible, and vested in the company’s future. Since the compensable factors correctly describe the range of jobs, evaluators will have to focus on a job’s various scopes and contents (Martocchio, 2015, pg.135). Furthermore, “evaluators will have to divide each factor into a sufficient number of degrees to identify the level of a factor present in each job. Degree definitions should set forth and limit the meaning of each degree so evaluators can uniformly determine job descriptions” (Martocchio, 2015). Job factors are focused interpersonal, technical, organizational knowledge, and special skills and also experience and education. According to HR-guide, 2015, the steps to complete the point method are as followed:

• The point method is an extension of the factor comparison method.
• Each factor is then divided into levels or degrees which are then assigned points. Each job is rated using the job evaluation instrument. The points for each factor are summed to form a total point score for the job.
• Jobs are then grouped by total point score and assigned to wage/salary grades so that similarly rated jobs would be placed in the same wage/salary grade (HR-guide, 2015). Determining Proper Weights for compensable factors Determining the proper weights for compensable factors is the next step for the professional evaluator at eSonic to complete. Deciding which job factors are most important to

the least important and assigning each a number from a fair and equitable base rate. After acquiring the base rate, it is divided amongst the five factors, by importance. The five compensable factors are comprised of skill, mental, physical, responsibility, and working conditions. Once each factor has its proper number assigned then they can be added up to figure what the base rate will be (Chand, 2019). (For an example see Appendix 2, figure 2). Calculating Point Values Calculating point values properly is an important step in the process of determining how much value to distribute to each job within the job structure. By ensuring the proper steps are taken the end result can be used to help determine the correct pay a job is worth. By placing the jobs in their own individual categories and assigning proper calculations will also help when comparing the proper pay with other companies in the same field. This keeps a good balance in the field to keep firms on the right track on how much to pay because no one firm should or would want to pay too much or not enough for each assigned job. The degrees in which each job is evaluated can be determined by defining different levels of each factor and then assigning a sub-factor. Breaking all this down helps organize the job structure, what factors are important for each job, and how to rate each of those properly (Duggan, 2019). “A comprehensive job evaluation system helps you ensure that your company’s pay and promotion structure reflect an equitable system” (Duggan, 2019, pg.1). To calculate point values for the chosen e-Sonic jobs, many steps need to be taken to get a proper point value. First, each compensable factor needs a point value determined. Second, calculate the point values for each job position using an evaluation worksheet. Third, proper allocation of points for each compensable factor should be distributed throughout the degree statement. Fourth, rate jobs using point method. Fifth, rate jobs independently to guarantee

consistency. Six, determine any inconsistencies in point totals and fix them. Last, by using the results of the point evaluation, rank jobs in each job structure accordingly (Martocchio, 2015). (See Appendix 1: Job Structures for examples). Determining Appropriate Pay-Policy Mix There are several reasons why determining the appropriate pay-policy mix is important for any firm. Paying the proper wages can affect an organizations productivity, cost control, recruiting challenges, and talent retention. Also, any organization should determine the proper benefits package their company is willing to offer their existing and new employees. Many individuals look at benefit packages over actual pay when looking for a job (Mayhew, 2019). To ensure a suitable pay-policy mix is created, several measures can be taken. For starters, taking the time to review and compare the job descriptions for correctness and totality and then comparing them to publicized job postings, job boards, and career pages for comparison in positions, duties, skills, qualifications, as well as salary ranks, can ensure proper pay and compensation (Mayhew, 2019). “Subscribe to employer surveys conducted by compensation and benefit research institutes for up-to-the-minute wage and salary information specific to your locale or industry” (Mayhew, 2019). Research is the best way to acquire the most accurate information and the U.S. Bureau of Labor Statistics is a great place to start. The Bureau of Labor Statistics provides wage information for thousands of jobs by using occupation, industry, and locale to determine acceptable wages. During research any firm should use information from public-sector job databases, obtain historical pay scales for employees in the current business, should determine how experience, qualifications and tenure affect employees’ wages, and discuss proposed salary scales with the company’s compensation and benefits specialist or finance officer (Mayhew,

2019). A pay-policy mix will consist of base wages, short-term incentives, long-term incentives, stock market options, profit sharing, and any other benefit that can be offered to e-Sonic’s employees (Martocchio, 2015). Pay Policy Level Decisions Determining the pay policy level e-Sonic will use, will be by evaluating the seniority- based pay and the merit-based pay. The difficulty in determining which pay-policy level to choose can be eased with a little research on the topic and choices. While making the proper decision, the research may seem as though the decision may have implications only in the area of compensation management but understanding that an improper pay system choice can lead to greater turnover rates, especially for high-ranking performers (Daly, 2019). Seniority based pay systems are defined as a system that uses the primary basis for pay by their tenure in the company. “Some benefits of seniority-based pay include loyalty, retention, and stability of all staff members, regardless of performance levels” (Daly, 2019, pg.1). Merit- based pay systems use performance as measurement for the primary basis of pay. “Employee performance, however conceptualized by the organization, is the impetus in determining pay raises. Performance-based pay systems can actually lead to a climate in which all employees are working hard to achieve maximum performance” (Daly, 2019. Pg. 1). Looking at the advantages and disadvantages of senior-based pay verses merit-based pay is an essential part of deciding which base pay system e-Sonic will use. Senior-based pay has some advantages, has been around longer than most pay systems, and are fairly easier to administer. Since each employee is treated the same this system can eliminate any perception of favoritism (McDonnell, 2019). The senior-base pay system seems to “produce a stable workforce

of loyal employees with relatively low employee turnover and create a cadre of highly- experienced incumbents in a job who have been performing the same job for many years” (McDonnell, 2019, pg. 1). The disadvantages using a senior-base pay system are as followed:

• Pay scales based on seniority have disadvantages that make them incompatible with a strategy to develop a high-performing workforce.
• These systems tend to retain the average or below-average performers in a job, and higher performing employees are more likely to leave an organization.
• Seniority-based pay encourages the status quo and discourages innovative or creative thinking that might increase productivity by changing how a job is structured or how employees perform the job (McDonnell, 2019). Using merit-based pay systems tends to be where most businesses are heading especially if the want to reward employees based on their performance. Merit pay is an attempt/approach to compensation and has some advantages and disadvantages as well. A merit-based pay system tends to work best when a company has comprehensive data obtainable to gauge the performance of their employees. The correct data can help an organization achieve their bottom line, can foster growth and performance in their employees, and can help employees attain more money as they perform better (Heathfield, 2018). Merit-base pay systems communicate company objectives, let’s employees know where they stand, and aids in employee retention (Healthfield, 2018). Some disadvantages of using a merit-based pay system is that some businesses may not be good at measuring employee contributions, there can be concerns about favoritism amongst employees that routinely get rewards, and communication troubles can arise when the supervisor fails to communicate what entails rewards and what is expected from each employee (Heathfield, 2018).

Reconciling Differences E-Sonic will need to keep excellent accounting to ensure all personnel receives accurate and agreed upon pay wages. Payroll needs to balance with the payroll expense account in e- Sonic’s ledger each pay period. “The payroll reconciliation process helps keep accurate accounting records, which are necessary for tax filing and measuring financial health” (Cameron, 2017). Checking that the payroll register is equal to the calculated transactions in e-Sonic’s books is also a good measure to avoid errors. “When you reconcile payroll, also make sure you recorded the correct amount for each employee. And, look to see if each transaction was recorded in the correct ledger account” (Cameron, 2017). Cross checking with another accountant or clerk will also keep things honest and accurate and help keep errors or fraud from happening. All agreed wages, salaries, compensations, hours worked, social security, and taxes will also be double checked (Cameron, 2017). E-Sonic wants their employees happy and seeks stability within the company. The best way to achieve that is to be sure e-Sonic’s employees are paid honest, fair, and agreed upon wages. External Competitiveness External Competitiveness is when an organization compares a position at their company against another position in a similar company in the market. “External competitiveness is expressed in practice by (1) setting a pay level that is above, below, or equal to that of competitors, and (2) determining the mix of pay forms relative to those of competitors” (Albornoz, 2006). External Competitiveness is important to ensure the pay relationship amongst firms are relative to each other and exist to control costs, and attract and retain employees (Albornoz, 2006). “The idea that pay should be based on a balanced combination of external marketplace competitiveness as measured by surveys and internal equity is well accepted in the

Total Rewards community” (Brennan, 2015). E-sonic desires talented employees and their goal is to attract and retain those employees. By exercising and maintaining adequate and fair wages and compensation is to e-Sonic’s advantage if it hopes to achieve the best people in their field of work. Top performers that are knowledgeable in their fields of expertise is exactly what e- Sonic will obtain by evaluating and utilizing external competitive and competitive pay (Brennan, 2015). Compensation Survey Compensation surveys gather and summarize compensation data and deliver a method for comparison of salaries at the firm. “Surveys may focus on one or more job titles, geographic regions, employer size, and or industries. Salary surveys may be conducted by employer associations (e.g., SHRM), survey vendors, or by individual employers” (HR-Survey, LLC, 2019). Salary surveys analyze quantifiable and non-quantifiable characteristics of compensation. Types of data gathered is as followed: (HR-Survey, LLC, 2019).

• Base salaries
• Increase percentages or amounts
• Merit Increases
• Salary Ranges
• Starting Salary
• Incentives/Bonuses
• Allowances and Benefits
• Working Hours
• Educational Requirements
• Geographic Location
• Source of Hire (Internal/External)
• Working Conditions (HR-Survey, LLC, 2019). An adequate Compensation survey is an important tool for any company’s toolbox and e-Sonic can only gain from its use in attracting and retaining new talent from the music

industry market pool of candidates. Compensation surveys give employers and employees a deeper level of knowledge about how compensation can be balanced even though it may look different at each firm. The proper balance will attract the candidates that want those benefits and will align with e-Sonic’s offers. Implementation Proper and thorough implementation is an important step to ensure success of any program and even morale amongst the employees involved initiating it. The effectiveness of the implementation is important and according to the MNC Consulting Group, (2019), there are ten requirements for successful program implementation. These requirements are the groundwork of implementation strategies and are listed as followed: (MNC Consulting Group, 2019).

• Business Readiness Checklist
• Liaison Roles: Assign one staff member to be in charge
• Software or Other Equipment on Site and Ready to Perform
• Training: Pre and post implementation
• Communication
• Advanced Scheduling
• Resources Ready
• Logistics: Assign one staff member
• Budget
• Change Management: To help deal with the new changes implemented (MNC Consulting Group, 2019). E-Sonic will ensure a smooth transition of their implementation plan of the salary survey by following the pre-strategy steps and then creating a project charter to provide a detailed roadmap of the work needed to be accomplished during implementation (MNC Consulting Group, 2019). Planning the compensation budget for e-Sonic should be conducted annually and begin in the fall of the prior year. Inflation should be factored in for the next year’s compensation

budget and using the CPI (Consumer Price Index) online can help professionals retrieve the necessary data to make the proper adjustments (Martocchio, 2015). Interpretation of Results The proper software developed for calculating the job evaluation points and the pay values can be used to run a regression and will do all the calculating for the analyses for each job structure (Martocchio, 2015). The market salary survey will generate the job position desired, the job evaluation points from e-Sonic’s analyses, and the annual salary for that position. Once the software yields the results a clear pattern will reveal, on a graph, that e-Sonic’s job evaluation points and external firms pay different for the same position. Then by using the software that has a certain formula, e-Sonic can plug those numbers in and a R (Relative Fit) squared statistic will be generated (Martocchio, 2015). The differences between the two figures can be a result of various sized firms, education levels, cost of living, and many different compensation benefits for each position (Martocchio, 2015). Once the survey data captures the ranges, e-Sonic can “benchmark against the actual spans in the market, and then adjust to match the common practice, if desired. This avoids overpaying on the low end and underpaying on the high end of the range” (Birches Group, 2015). Salary structures are determined by e-Sonic setting maximum and minimum values and all employees will be paid with some variation in between (Birches Group, 2015). Those variations in between can be altered or adjusted as the employee earns promotions, adds benefits, or furthers their education. The pay scale can be used to explain/justify the different levels of pay if any e-Sonic employee were to inquire. Pay grades need to be determined because they group the various jobs

for pay policy applications. Wider pay grades lower the hierarchy and social distance of employees and narrower pay grades tend to indicate the opposite by promoting (Martocchio, 2015). Once the pay grade and midpoint are determined, then minimum and maximum values for pay grades based upon e-Sonic’s determined pay range (Martocchio, 2015). Summary of Decision of Job Structure Placement Designing the compensation plan for e-Sonic related to employment activities by creating job descriptions, a system for organizing those jobs, performing an external market survey, and by using the benchmark jobs in the external market, e-Sonic’s job structures were created based on the qualifications of the jobs listed (Martocchio, 2015). The functions and responsibilities are listed under each job, so that inquiring companies can focus on the special abilities, education levels, experience, and qualifications while targeting the desired applicants and establishing the job structures. The compensation strategy was designed once the point values that e-Sonic created were added to the job structure and graded from least responsibility to the greatest. E- Sonic has finally created a competitive pay-system in the market that will attract the desired talent and aid in retaining them once hired (Martocchio, 2015). Appropriate Contributions Policy Based on the research, the data accumulated, and how e-Sonic wants its employees involved, merit-base pay system will benefit them as opposed to a senior-base pay system or incentive-base pay. The reason is because e-Sonic values its employees by their individual contribution of the work and degree of work they invest in the company. E-Sonic wants to be able to foster employee involvement on many levels and rewards accordingly. The company will

best achieve this goal if communication and education on what is expected from each employee and to what exactly they will receive and how their reward will be obtained (Heathfield, 2018). “A job-based pay structure is a structure of salary payments that is built on compensable factors determined by the job. In other words, the salary for a job is determined by its responsibilities, and sometimes its work conditions” (Wordpress, 2015). Since no two people are identical, no two jobs are as well. Therefore, no two compensation plans have to match (Martocchio, 2015). Using the job analyses that e-Sonic conducted, a merit-based system will aid in evaluating each employee and paying them accordingly to their unique qualifications for that job. Historical Perspective Worker’s compensation and benefits have existed for hundreds of years, but most of the legally required benefits were established between 1900 and 1950 with the aid of political and social influences (Jerrell, 1997). The legally required benefits that were formed were workman’s compensation and the Social Security Act of 1935, that provided senior-aged retirement plans and unemployment insurance (Jerrell, 1997). “Each of these came into being amid much debate, and America’s political, economic, social, and business structures were changed forever with their passage” (Jerrell, 1997). American workers experienced the Great Depression, growth in unionization, and the number of women working in the 20th^ century and changes in the methods of pay began to shift further than ever before (Moehrle, 2003). “At the turn of the 20th century in America, few workers would have received anything more than wages as compensation for their