Fresh Munchables

Fresh Munchables is a mid-sized but steadily growing food-processing company founded in 1967. Since its inception, the company has been committed to providing only premium quality health foods. The company is headquartered in Wichita, Kansas, and it is one of the area’s largest producers of soups and simple meals. In the past 20 years, the company has also begun processing healthy snacks and beverages. Fresh Munchables has traditionally sold its products through large grocery stores, but it is now venturing into online and restaurant businesses, which is all very new territory for management.

The company is split up into three overarching strategic business units—soups and meals, drinks, and snacks. Additionally, the company is divided into several business units at the operational level, consisting of a mix of business operations, manufacturing (production), research and development, finance, and so on. As the company continues to grow, the executive team and other leaders are constantly looking for ways to improve processes.

Because Fresh Munchables has grown from a very small company into a well-established organization, management has decided to broaden the company’s strategic HR functions. The human resources team is currently working to improve recruiting and hiring processes, succession planning, and most importantly, compensation and rewards.

For many years, the company has delegated compensation decisions to managers with little to no training on the subject. This has left the company in a disorganized, confused state when it comes to paying and rewarding employees. These problems have compounded as Fresh Munchables has recently opened up new manufacturing locations with new managers and many new employees.

The chief human resources officer has organized a team of compensation specialists of which you are a part to spearhead total compensation-related problems and help the company to reach its current and future goals. You and your team can achieve this by revising the current total compensation system to reflect the company’s current business strategies and goals as well as attract and retain top talent.

Communication at Fresh Munchables has traditionally been all over the place. Both misinformation and a lack of information among all levels of employees have created many avoidable problems over the years.

While developing the new compensation system for Fresh Munchables, what kind of communication strategy should the compensation team incorporate, and why?

• Top-down, because it ensures that employees get the correct information from managers, who are the correct and best source
• Bottom-up, because it allows management to consider information gathered from employees when making decisions
• Two-directional, because it enables the sharing and receiving of important information between the organization and employees
• Multifaceted, because it allows for an increase in collaboration between functions and business units

In the preliminary stages of developing the compensation system, the compensation team at Fresh Munchables assigns a member of the team to perform a SWOT analysis to better understand the organization’s environment and how that may influence the compensation system.

Which of the following outcomes may be discovered in the SWOT analysis for Fresh Munchables?

• Critical success factors—such as customer perceptions of the company as the leading healthy packaged foods brand—that will foster competitive advantage
• Strategic performance factors—such as metrics for productivity in the snacks division and detailed plans for improvement in the soup division—that will provide a competitive advantage
• Vital success components—such as a strength in marketing and a weakness in employee retention and satisfaction—that will allow for a competitive advantage
• Strategic compensation factors—such as overarching company goals to outperform competitors in the food and beverage industry—that will allow for a competitive advantage

An area competitor of Fresh Munchables, Tio’s Foods, has good, hardworking employees—many of whom could be valuable employees at Fresh Munchables. In fact, the executive team has been trying to poach Tio’s employees for some time now. Tio’s, in many ways, has neglected to take care of its employees, which could potentially lead to the formation of a union. If the compensation team at Fresh Munchables were to perform a SWOT analysis, this situation is likely considered to be a(n) ________.

• Strength, because Fresh Munchables can use this information to add value to its customers
• Opportunity, because Fresh Munchables can leverage the information to target desired talent
• Weakness, because Fresh Munchables must now consider whether it is also treating its employees poorly
• Threat, because Fresh Munchables is now likely to experience union activity as well

The shipping division at one of Fresh Munchables’ facilities has been struggling with both absenteeism and high regrettable turnover. The facilities manager at this location is not sure what to do.

What steps can HR take to address this concern?

• Ensure that employees aren’t being poached by other companies; many companies will actively steal talented people, and organizations must be aware of it.
• Ensure that wages in the unit are just and fair; the perception of justice plays an important role in absenteeism and turnover.
• Ensure that employees in this division can receive promotions; employees won’t stick around unless they have a clear career path.
• Ensure that wages are at least average or above; wages that are even slightly below average cause absenteeism and turnover.

Fresh Munchables has traditionally paid minimum wage for low-level positions. However, the company is having difficulty attracting employees to work in its food processing facilities. Some of these jobs require night and weekend hours.

Which of the following types of compensation would be most helpful for the company to offer to potential employees in the Fresh Munchables food processing plant, and why?

• Overtime pay, because it provides an incentive for employees to work additional hours
• Shift pay, because it provides additional compensation for hours worked at undesirable times
• Reporting time, because it gives employees more control over the hours they work
• Paid vacation time, because it shows employees that the company is generous with its benefits

The HR department at Fresh Munchables is considering a point factor approach for establishing internal alignment. The company is mid-sized but is growing steadily, and it is projected to become a large organization within the next 10 years.

What is true about the point factor approach that would benefit Fresh Munchables?

• The point factor approach gives each job in the organization a quantitative rating of its overall value, which is a quick and simple way to develop a pay structure.
• The point factor approach allocates points to jobs based on how much value the people who hold those jobs provide, which allows the company to reward individual employees.
• The point factor approach provides a method for calculating points for each job based upon the job’s value to the organization, which is easily scalable for use in a large company.
• The point factor approach ranks each job in a company from “most important” to “least important,” which is key for a company with a growing number of positions.

The HR department at Fresh Munchables is considering a job comparison approach for establishing internal alignment. Fresh Munchables has been around for several decades, but it has always struggled with determining appropriate compensation for different levels of jobs.

What is true about a job comparison approach that would benefit Fresh Munchables?

• In the job comparison approach, jobs are valued in comparison to other jobs in a company using a point system, which allows for pay to be determined by a job’s importance to the organization.
• In a job comparison approach, pay is set by how well employees in different jobs perform over a set period of time, which is easily determined in an established organization.
• In the job comparison approach, jobs are placed in a nonhierarchical system to avoid complaints of unfairness, which is important when increasing organizational complexity.
• The point factor approach involves defining valuable elements of jobs and determining their relative importance, which helps managers know how to train their employees to receive promotions faster.

Amanda, Fresh Munchables’ new compensation manager, is evaluating the company’s current compensation system and is thinking about making large, but valuable, changes. Amanda knows she also needs to consider the effects of the changes on the people at the company.

Which of the following people will be most affected by changes in the rewards system used at Fresh Munchables?

• All individuals who work for the company at any level
• Tasha, the CEO who has worked for Fresh Munchables for 15 years
• John, a newly hired warehouse employee who has not yet been paid
• Maria, a manager who earns a fixed salary and a performance bonus

Draymond is a machine operator who recently quit his job at Fresh Munchables. He would often arrive at work only to find that, due to unexpected mechanical issues, he would be unable to do his job and would be sent home (over an hour’s drive away) without pay. Other factory workers have complained for similar reasons. Fresh Munchables wants to improve employee satisfaction and prevent such situations from occuring in the future.

What is the best compensation-related action to take to achieve these goals?

• Pay the transportation costs for employees to get to and from work.
• Institute a call-back pay differential for factory workers.
• Offer reporting time pay to employees just for showing up to work.
• Provide increased overtime pay for hourly employees.

The CEO of Fresh Munchables wants to enter the online marketplace and sell select snack products online. As a member of the HR department, you are given the task of creating new departments to manage Fresh Munchables’ online business activities.

Using a job-based approach, what do you need to do first before creating a pay structure for these new departments?

• Determine how much each employee should be paid, because employees who are better qualified should be paid more
• Determine what new jobs will be created and managed, because compensation depends on what types of jobs are created
• Determine the value of each job, because employees who do their job better provide more value and should be paid more
• Determine who will manage each department, because managers’ salaries should be determined first

The compensation team at Fresh Munchables has begun a review into the company’s current compensation system. You have been assigned to conduct short interviews with mid-level and low-level employees to assess what type of compensation would be most attractive to them.

Which other group in the organization should you interview in order to fulfill the purpose of the total compensation system?

• The finance department, because if the company is successful and profitable, more employees can be hired
• More mid-level and low-level employees, because if the employees’ needs are not met, they will likely leave the company
• An outside consultant, because an external contact will provide less biased information
• Top management, because both the employer and employees need to be satisfied in order for the working relationship to continue

Fresh Munchables’ compensation system has stayed the same for many years. The newly hired chief human resources officer is stunned to discover how outdated it is, as the company has grown and changed significantly over the years. However, changing the company’s compensation system is not cheap, and Fresh Munchables’ executive team is hesitant to act.

What information could the chief human resources officer share to convince the executive team that building a new compensation system is worthwhile?

• An aligned compensation system will produce higher-caliber managers, directors, executive team members, and employees.
• An aligned compensation system will improve diversity, company presence in the media, public relations, and costs.
• An aligned compensation system will improve culture, morale, performance, and the company’s brand.
• An aligned compensation system will improve performance, retention, perceptions of fairness, and efficiency.

Unlike other healthy food producers in the local market that sell low-quality and cheap products, Fresh Munchables wants to provide premium food products at a high cost. In fact, Fresh Munchables has become known in its community for placing a high priority on always providing great food and superior customer service.

In order to continue to facilitate Fresh Munchables’ goals and reputation, what competitive strategy should HR implement?

• A cost leadership strategy, because the company desires to lead the market in providing the best products at a high cost
• A differentiation strategy, because this approach justifies spending more money to stand out from competitors
• A value proposition strategy, because this approach focuses on the value that the company’s products adds to its customer base
• A niche-focused strategy, because the company is targeting a small group of people in a segmented market

Several new positions have recently been created to streamline the delivery of ingredients from Fresh Munchables’ factories to its restaurants. The CEO of Fresh Munchables wants the HR department to figure out how much each position should be paid based on the company’s internal rewards alignment.

What question should not be considered in order to make these new positions fit within the company’s pay structure?

• How well does each position’s rewards align with those received by others in the company?
• How can the company maintain good morale, collaboration, and information sharing among employees?
• How should two employees with similar duties but different titles be paid?
• How well does each position’s rewards align with those received by others in similar positions in competing companies?

While developing the new compensation system at Fresh Munchables, the compensation team decides to ask an HR generalist for assistance. The HR generalist doesn’t have any formal experience in the area of compensation but is well informed about the concerns and desires of the management team.

Within her realm of experience, how can the HR generalist best help the compensation team to create strategic compensation to benefit the company as a whole?

• She can help the company increase the number of work-related benefits it offers to employees.
• She can help the company comply with minimum wage and overtime laws and ensure that legal obligations are met.
• She can help align compensation with the company’s business strategy to reach its current and future goals.
• She can help establish policies that discourage hiring employees who require higher compensation levels.

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