George Is a Long-Term Exceptional Performer

question 114

Multiple Choice

George is a long-term exceptional performer.He has a compa-ratio of 120 and once again his performance has exceeded expectations.But,George only gets a raise of 3%,which is less than some of his co-workers who have less seniority and whose performance only meets expectations.George is incensed and waiting in your office.As director of HR,how will you explain this situation to George?

• A) You should discipline George and his co-workers because employees should not discuss their pay.
• B) You explain that George's compa-ratio shows that he is at the top of his pay range and that he is already earning above the market midpoint set in his pay grade.
• C) You should describe the reality of pay compression to George and that market rates determine what the organization can pay for a particular job no matter how well carried out.
• D) You decide to give George a lump-sum increase equivalent to a 10% raise. This will recognize George's exceptional performance without affecting his base pay.

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Definitions:

Corporate Raiders

Investors who buy a large stake in a corporation with the goal to gain control and make changes to increase its value and their profit.

Hostile Takeovers

Hostile takeovers occur when a company acquires another company against the wishes of the target company's management and board of directors.

WACC

Weighted Average Cost of Capital, or WACC, is a financial metric that calculates the cost of capital for a business, weighting each capital segment according to its relative proportion.

Discount Rate

This is the interest rate applied in calculating the present value of cash flows that are expected in the future, using the discounted cash flow approach.