Joe's Hambuger Grill Case: Compensation, Agency Theory, FLSA
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1. What are some suggestions that might help Joe as he thinks about changing the way he pays someone to manage the Grill?
2. Do you think Joe's approach to determining how much to pay a manager was successful? Would you recommend that he do something different?
3. How might agency theory guide Joe as he thinks about finding a manager who might someday become the owner of the Grill?
4. How can the concepts of equity theory guide Joe's decisions concerning comparisons with pay in other cities and for other jobs?
5. How might FLSA standards apply to Joe's compensation decisions?
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The solution provides detailed answers to each of the 5 questions posted by the student.
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1. What are some suggestions that might help Joe as he thinks about changing the way he pays someone to manage the Grill?
Well, as we can definitely see, Joe needs to delve into what similar positions are paying elsewhere. The fact that he lost one manager to another city is somewhat relevant, although people don't always move for higher paying jobs. But they will likely change jobs within the same geographic area over compensation. He should do some research into exactly what the pay is in his area, and offer a compensation package that's competitive. One thing he did, which was almost on the right track, was to ask what the candidate was currently making, and then offer more. I would recommend he ask people what their "expected salary range" would be. He may get a couple people who refuse to answer ...
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