Review the following Case Study: Columbus Custom Carpentry: A Compensation Case Study
Columbus Custom Carpentry: A Compensation Case Study
Columbus Custom Carpentry is a small, successful company. Recently, though, labor costs have risen faster than revenue. The company president has also found that human resource issues are taking up more and more of his time and frequently result in production problems. Both overtime and late shipments are increasing. Until now, the president’s administrative assistant handled all HR-related administrative activities. You are here as the newly-hired HR manager. You will learn about the company by reading the employee handbook; talking with various employees; and reviewing the human resources information system (HRIS) database.
In this case, you will learn and create internal and external pay equity analyses. This case is presented as close as practical to the way students will encounter data in the working world. Materials include an employee handbook, and a HRIS database (i.e. Excel Workbook).
Please note: you may need to maximize the HRIS database spreadsheets in order to view the multiple sheet tabs near the bottom of the screen.
Reference: Reys, D. (2023). Columbus custom carpentry: A compensation case study. Society for Human Resource Management, Instructor Resources.
Using the attached materials and information above, you will conduct an internal and external pay equity analysis, as well as provide recommendations.
Columbus Custom Carpentry: Employee Handbook
By Douglas Reys, SPHR
ToTal REwaRds EmployEE Handbook
Author: Douglas Reys, SPHR
SHRM project contributors: Bill Schaefer, SPHR, CEBS
Nancy A. Woolever, SPHR
External contributor: Sharon H. Leonard
Copy editing: Courtney J. Cornelius, copy editor
Design: Jihee K. Lombardi, graphic designer
© 2010 Society for Human Resource Management. Douglas Reys, SPHR
For more information, please contact: SHRM Academic Initiatives 1800 Duke Street, Alexandria, VA 22314, USA Phone: (800) 283-7476 Fax: (703) 535-6432 12-0761-EH
© 2010 society for Human Resource Management. douglas Reys, sPHR 1
Columbus Custom Carpentry: Employee Handbook HISTORY
Columbus Custom Carpentry is a family-owned company founded in 1946. While our product line has changed over time, we have evolved into a stable and profitable business. We operate in a niche market, producing semi-custom interior doors for residential applications. We do not compete directly with mass manufacturers of traditional doors, nor do we sell through mass-market big-box stores.
Our success has come about through the development of various jigs and special tools to produce replacement antique-styled doors for the restoration market. We also have a line of contemporary doors that are more aggressively styled than their standard mass-market competitors. Our proprietary tools and systems allow us to underprice the build-to-order custom manufacturers and to be profitable at volumes well below what would be required for profitability in the mass-market arena.
This success has resulted in steady growth over the last few years. We are still in a single Midwest location, but we now have four buildings and 135 employees. Our annual sales exceed $15 million.
Our employees work in a number of different roles supporting various departments, which are grouped into four overall units: manufacturing, warehousing, administration and marketing.
Our manufacturing group is composed of three departments: preprocessing, assembly and finishing. Together, these departments are the core of our business. This is where we actually make our residential doors. Preprocessing is primarily a sawing and sanding operation, where raw materials are turned into the specific pieces that will eventually be assembled into doors. Assembly, as its name implies, is the area where the parts are assembled into complete door products. The finishing department applies paints or stains to those products that are sold primed, painted, stained or custom-finished.
Our warehousing group is also made up of three departments: receiving, crating and finished goods. The receiving department unloads incoming shipments of raw materials and supplies used by our company. It is also responsible for keeping the manufacturing areas stocked with materials and supplies. The crating group receives products directly from the assembly and finishing departments when the products are completed. The crating group packages them to avoid damage in storage and shipment. Finally, the finished goods warehouse takes ready-to-ship items from stock
2 © 2010 society for Human Resource Management. douglas Reys, sPHR
and loads them onto outbound trucks according to the customer orders sent by customer service.
Our administrative group includes corporate accounting and corporate services. The corporate department is made up of the president, an administrative assistant, the receptionists and the HR manager. Accounting pays our bills and collects payments from our customers. It also reports on our financial progress. Our corporate services group does everything from running the mail room to cutting the grass.
The marketing department includes sales, customer service and new product development. Sales are the people who get out there and talk with builders, architects and contractors to create demand for our products. Customer service is the group that handles everyday contact with our customers. It is responsible for receiving new orders and for problem resolution. New product development is also a marketing function. It keeps our products up-to-date and creates the special tools that allow us to produce more efficiently than our competitors.
Human Resource Manager
Sales Preprocessing Receiving
Customer Service Assembly Crating
New Product Development Finishing Finished Goods
© 2010 society for Human Resource Management. douglas Reys, sPHR 3
VALUES: OUR “CCC” WAY TO SUCCESS
Customers First Our highest responsibility is to meet our customers’ needs with high-value products and excellent service. We work for our customers, who are both the builders and the owners of the fine homes our doors are a part of. If we do not provide a superior combination of quality and price, then it is only logical that our customers will buy from our competitors.
Craftsmanship We demonstrate pride in our work through attention to detail in the design and consistent production of our products. Each person’s work is not only a reflection of his or her own character, but of the team’s character as well. Good craftsmanship creates a lasting impression that reflects on the entire company. It is through our combined efforts and expertise that we optimize our performance.
Corporate Responsibility We promise to uphold the safety and health of not only our team members, but that of our customers and our neighborhoods as well. We do our part to protect the beauty and environmental quality of our land, air and water.
OUR PLEDGE OF QUALITY
Our customers live with our products on a daily basis and expect them to last 50 years or longer. Our customers expect and demand top quality, and they buy from us because we provide it affordably and with style.
We will be successful if we meet our customers’ needs by providing better products and services than offered by the lowest-cost providers, but at a better price than offered by our top-quality competitors. To do this, we must operate more efficiently than our competitors and offer a superior buying experience.
EQUAL EMPLOYMENT OPPORTUNITY STATEMENT
Columbus Custom Carpentry provides equal employment opportunities to all qualified applicants and employees without regard to race, age, religion, sex, national origin, citizenship, disability, military status or sexual orientation. This policy applies to all terms and conditions of employment, including but not limited to hiring; promotion; termination; layoff; leaves of absence; compensation; and opportunities for training or advancement.
The company expressly prohibits any form of harassment based on age, religion, sex, race, national origin, citizenship, disability, military status or sexual orientation. Interference with the ability of the company’s employees, vendors or customers to perform their jobs is not permitted. Harassment, regardless of its origin or type, violates the dignity of individuals and will not be tolerated.
4 © 2010 society for Human Resource Management. douglas Reys, sPHR
Columbus Custom Carpentry complies with all federal, state and local laws. Those protections of employee rights, including equal employment opportunity, hold a special importance for our company.
We trust that employees of Columbus Custom Carpentry will act responsibly to maintain a pleasant working environment free of discrimination, allowing each employee to perform to his or her maximum potential. The company encourages employees to report concerns or complaints. When management is made aware of harassment, prompt corrective measures will be taken to stop such conduct.
Employees who are being harassed should confront the harasser immediately and report the behavior to their supervisor. If the harassed individual feels uncomfortable approaching the harasser, the problem must be immediately reported to the supervisor. Any employee who becomes aware that another employee is experiencing harassment of any kind should report the alleged act immediately. A prompt and thorough investigation will take place, with violators subject to appropriate corrective action, up to and including termination.
Sexual harassment includes unwelcome verbal behavior, such as comments, suggestions, jokes or derogatory remarks based on sex; physical behavior, such as pats, squeezes, repeatedly brushing against someone’s body, or impeding or blocking normal work or movement; visual harassment, such as posting of sexually suggestive or derogatory pictures, cartoons or drawings (even at one’s work station); unwanted sexual advances, such as pressure for sexual favors and the basing of employment decisions (such as an employee’s performance evaluations, work assignments or advancement) upon the employee’s acquiescence to sexually harassing behavior in the workplace.
OUR WORkING ENVIRONMENT
Internal Communication Good communication is important to the success of any organization, and Columbus Custom Carpentry is no exception. We believe that sharing ideas and information results in better workplace relations and improved products. We recognize that the people actually doing the work have a unique perspective that differs from that of supervisors and management. We value this perspective and encourage you to share your ideas.
Misunderstandings or conflicts can arise between people in any organization. To ensure that we maintain effective working relationships, it is important that such matters be resolved before serious problems develop. Most incidents resolve themselves naturally; however, should a situation persist that you believe is detrimental to you or to the company, you should bring your problem to management’s attention.
© 2010 society for Human Resource Management. douglas Reys, sPHR 5
Supervisory Relations Successful organizations function as a team, made up of individuals like you. We recognize your value as an individual; your views are important, and we encourage you to share them with management. Your supervisor is your first line of communication with management. Your supervisor is responsible for your department meeting its goals and also shares responsibility for your personal success. We want what is best for you to be the same as what is best for your department and the company. With all of us working together, we can make our company a great place to work. If your supervisor cannot help resolve your issue, you may speak directly with your manager or the company president. We understand that you may be uncomfortable discussing certain issues with your supervisor; we encourage you to bring these issues directly to your manager or the company president.
Position Announcements The company posts available jobs whenever possible, but we do not post every opening. This most often occurs when a promotion is given to someone from within that department. On rare occasions, we may come across an outside applicant that impresses us so much that we bring him or her in directly. In another unusual and unfortunate circumstance, we might need to fill a position that is currently filled by an underperforming employee. However, the company is committed to promoting from within whenever practical.
Bulletin Boards To improve communication, bulletin boards are located in the main break room, the administrative office area and the employee entrance lobby. Postings include employment laws, environmental health and safety regulations, benefits information, job openings, and company activities.
Annual Report The president will present an annual report to employees to discuss profitability and future plans.
Facilities A smoke-free break room is available for your use. Automatic vending machines provide food, snacks and beverages.
Use of Office Equipment Employees are reminded that office equipment is company property. Therefore, employees are restricted from using fax machines, computers, e-mail, phones, voice mail, copiers and any related services, supplies or equipment for personal use, unless permission is given in advance. Limited incidental use is allowed. If you do not understand the difference between limited and excessive use, please discuss this with your supervisor before using the equipment. Employees are restricted from using company stationery or postage for personal use. All communication services and equipment are company property, and the company has the right to access and monitor all communication. If instances of abuse or use that is disruptive, harmful
6 © 2010 society for Human Resource Management. douglas Reys, sPHR
or offensive are found, then disciplinary action up to and including termination may be taken.
Employment of Relatives The company permits the employment of qualified relatives as long as such employment does not create a conflict of interest (for example, an employee reporting to his or her spouse). Judgment may be required in the placement of related employees, and we generally limit the number of relatives to no more than two. Employees who marry while employed are treated in accordance with these guidelines. Thus, if a conflict arises as a result of the marriage, one of the employees will be transferred at the earliest practical time.
Immigration Control Act Requirements Successful candidates for employment are required to present documents to establish their identity and eligibility to work in the United States. New employees must complete an I-9 form. Should a new employee fail to submit satisfactory documentation within the first three days of employment, his or her employment will be terminated.
Work Hours The regular workweek is 40 hours, Monday through Friday. The normal work hours for production and warehouse employees are 7:30 a.m. to 4:00 p.m., with a 30-minute unpaid lunch break, normally taken between 11:00 a.m. and 1:00 p.m. Part-time employees work hours as arranged. Office employees work eight hours between 7:00 a.m. and 5:00 p.m., with a 60-minute unpaid lunch break. The exact schedule is set by your supervisor. Employees are given two 10-minute breaks (one for every four hours worked) each day. These breaks will be scheduled by your supervisor based on department needs.
Summer Schedule Program During 10 weeks in mid-summer and dependent on business conditions, production may go on a “4-9s and a 4,” with Friday afternoons off. The office version of this schedule (for exempt employees) is nine nine-hour days (81 hours over 2 weeks), with every other Friday off. Employees pair off to cover the department functions, each taking an opposite Friday off. This schedule may not be available for everyone, depending upon company needs.
Recording Work Hours Hourly nonexempt employees must clock in each day. A time clock is located in the production area; office employees use their computers to clock in. Resolve any missed punches or other discrepancies within the same week. You should review and sign your time card at the end of each week. If you are absent the last day of the week, go to the accounting department first thing upon your return to sign the card. Please be sure that hours worked and leave time taken are recorded accurately.
© 2010 society for Human Resource Management. douglas Reys, sPHR 7
Falsification of a time record may result in disciplinary action up to and including termination.
Pay All employees are paid by direct deposit on a bi-weekly basis; a pay stub is mailed to your home each payday. Please review it for errors so that they can be corrected as soon as possible.
Overtime Pay Procedures We will try to provide advance notice of overtime and will use voluntary overtime whenever possible, but we may, on occasion, require employees to stay late at the last minute to meet a customer’s needs. In limited situations, overtime or weekend work may be considered mandatory. Employees receive payment for overtime in the pay period in which the overtime is worked, provided time cards are properly submitted. Exempt employees do not receive overtime pay but are expected to work overtime as needed. Exempt employees receive 24 hours of personal time each year in lieu of overtime pay.
Hourly nonexempt employees will be paid at their regular rate of pay for hours up to 40 in a workweek. Hours worked in excess of 40 hours will be paid one-and-one-half times the employee’s regular hourly rate of pay.
Payroll Deductions The direct-deposit pay stub will show what pay has been earned and what deductions have been made. The stub should be retained until you receive a W-2 for the year. Certain deductions are required by law and must be withheld from paychecks. These include federal income tax (FIT), Social Security tax (FICA), state and, in some locations, school district taxes. City taxes are withheld only for Columbus. You may owe additional taxes to your city of residence. Other deductions are optional and will be taken from your check only if you have signed a written authorization for these deductions.
Compensation and Performance Reviews It is our policy to pay for performance and to evaluate employees according to the factors in the individual’s job description. In addition to these job-specific factors, individuals will be judged on knowledge, attitude and teamwork. Employees will meet with their supervisor at least one time each year to discuss their overall performance. New hires are reviewed after 90 days.
Profit-Sharing Plan Employees are offered a cash (nonretirement) profit-sharing program that provides employees the opportunity to share in our profits. The employees’ share is based on operating income less an allowance for reinvestment in equipment and facilities. Payments are quarterly.
To be eligible for profit sharing, the employee must have been employed on a full- time basis at the end of the quarter. The success of this program rests with individual effort contributing to group productivity. When you find ways to utilize time or
8 © 2010 society for Human Resource Management. douglas Reys, sPHR
resources more effectively, eliminate waste and save costs, you increase profit sharing for all of us. If you know of a process or person that is holding back the rest of us, you owe it to yourself and your co-workers to speak up. Profit sharing will vary along with economic forces beyond our internal control; our business is especially tied to new home construction, which is a cyclical business sector.
Spot Bonuses An employee who makes a special contribution to profitability may receive a one- time spot bonus as recognition. All awards are determined by the president on a case-by-case basis. Employees are encouraged to nominate their co-workers when they make a special contribution.
To be eligible for benefits, employees must be full-time and work a minimum of 30 hours per week. New employees become eligible after 90 days. The group benefits programs are described more completely in the plan description booklets. Brief summaries are included in this section of the handbook. In case of contradictions between this handbook or other benefits summaries and the information that appears in the master plan documents, the master contracts or master plan documents shall govern. For more complete information regarding our benefits programs, please contact the receptionist.
Retirement Plan Columbus Custom Carpentry offers employees a retirement program called a 401(k) plan. This plan helps employees save for retirement through payroll deductions and supports employees’ efforts with company-matching funds. Employee savings in the 401(k) are deducted before tax, resulting in more money going into your account than the amount of reduction in your take-home pay. The company match is 100 percent of the first 2 percent of savings and 50 percent for 3-4 percent of savings, then 25 percent for 5-6 percent contributed. Employee contributions are held in a trust separate from company assets, except in the brief period between deduction and transfer to the investment company. The company match becomes vested (the employee earns an unrestricted right to the money) based upon years of service. After two years, the employee is 40 percent vested, 60 percent after three years, 80 percent after four years and 100 percent after five years of service. Employees must complete one year of service to be eligible. See the plan document for more details.
Medical Coverage The medical plan is a combination of two types of plans—a preferred provider network and a traditional indemnity plan that does not require a network. Employees are automatically covered under both and will receive the better preferred provider organization (PPO) network benefits whenever they use a PPO provider. Our PPO network offers high-quality care at a discounted price. Benefits provided under this plan are only for services done by a PPO member. These are referred to as network providers.
© 2010 society for Human Resource Management. douglas Reys, sPHR 9
A prescription drug plan is included with the medical plan. All full-time employees and their eligible dependents qualify for participation in the group dental insurance program. Coverage for eligible employees is effective after 30 days of employment.
COBRA Continuation of Coverage The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.
Life and Accidental Death and Dismemberment (AD&D) Insurance The cost to provide this benefit is paid completely by the company. All full-time employees are eligible to participate in the life insurance program. Coverage is for employees only; dependent coverage is not provided. Coverage for employees is effective after 90 days of employment. Under this program, employees are covered by a life insurance benefit of two times their annual base salary up to a maximum of $300,000. Additional coverage for the same amount is provided in the event of accidental death or dismemberment. There is also a seat belt rider that will pay an additional $10,000 if death occurs while wearing a seat belt.
Life insurance of more than $50,000 is considered “excess” by the government. The cost of providing this excess coverage is taxable to the employee and will appear on the employee’s pay stub as “Grp-Life.”
Supplemental Life Insurance Employees and their dependents are eligible for supplemental life insurance. To be eligible, an employee must have been employed for 90 days. The enrollment period is in December of each year, with coverage effective January 1. The plan can be dropped at any time.
Travel Accident Coverage Employees traveling on business overnight or more than 400 miles from the office are covered by an additional $400,000 of life insurance.
10 © 2010 society for Human Resource Management. douglas Reys, sPHR
VACATION, HOLIDAY AND TIME-OFF BENEFITS
Vacation and Holiday Benefits Vacations and holidays are some of our most popular benefits. All employees are eligible; persons working part-time receive prorated benefits. Benefits are set by length of service as of January 1, according to the following schedule:
Years of Service Vacation Weeks < 1 year Prorated (by months of service/12 x 2 weeks) 1 year 2 weeks 5 years 3 weeks 10 years 4 weeks
Vacation time will be granted each January 1. By seniority, employees can reserve one week per year. Once all employees have had the option to choose their first week, employees may choose to reserve additional weeks by seniority. Supervisors may limit the number of people on vacation at any one time by department or position.
Vacation time of up to five days can be carried over to the next calendar year. Employees terminating employment for any reason are entitled to payment for unused vacation time when they give their two weeks’ notice.
Holidays The following are paid holidays. Employees are eligible immediately upon employment; persons working less than full-time will be paid on a pro-rated basis.
New Year’s Day Thanksgiving Day and the Day after Thanksgiving Memorial Day One half day on Christmas Eve Independence Day Christmas Day Labor Day The day before/after July 41
1 We take the day before July 4 when it falls on a Tuesday; the day after when it fall on a Thursday; or a personal holiday on your choice of dates when the holiday falls on other days.
Nonexempt Employees Five days of sick leave per calendar year are available to each employee. Sick leave is earned beginning January 1 each year by all full-time employees who worked a minimum of 1,500 hours in the previous calendar year. First-year employees receive a prorated amount. Sick leave is not carried over from one calendar year to the next, but unused sick time as of the end of the year will be paid out in a lump sum in January.
Exempt Employees Exempt employees continue to receive their regular salary until their sick time or disability exceeds 30 days in a calendar year. After that, they will either go on disability at 60 percent of pay or be converted to hourly status and made ineligible
© 2010 society for Human Resource Management. douglas Reys, sPHR 11
for sick time until they are able to return to work on a regular basis. Exempt employees do not receive a lump-sum payment for unused sick leave.
Short-Term Disability When medical documentation proves a need for disability, leave will be granted for up to six months to a disabled employee. Full-time employees will receive disability pay at 60 percent of their base pay beginning the first day of an accident or after five working days of illness. Part-time employees may take leave on an unpaid basis.
Long-Term Disability Coverage is provided at 60 percent of base earnings for disabilities lasting more than six months. After two years, continuation of coverage requires that the employee be unable to work at any job, not just his or her current position. Additional limits exist for disability due to mental health conditions.
Family and Medical Leave Act (FMLA) The Family and Medical Leave Act (FMLA) provides certain employees with up to 12 weeks of unpaid, job-protected leave per year. It also requires that their group health benefits be maintained during the leave. FMLA is designed to help employees balance their work and family responsibilities by allowing them to take reasonable unpaid leave for certain family and medical reasons. It also seeks to accommodate the legitimate interests of employers and promote equal employment opportunity for men and women.
The employee must provide a written request for FMLA leave. This request must state specific reasons why the leave is necessary and the anticipated start and the duration of the leave. This request must also be timely when possible—30 days in advance of the start of the leave. If the situation is an emergency, the employee should notify his or her supervisor or manager as soon as possible. Supporting documentation is required.
Bereavement Leave If a death occurs in an employee’s immediate family, he or she will be paid for time lost from the regular workweek up to three days (five days if out-of-state travel is required). Leave will be granted as needed for the death of non-immediate family members on an unpaid basis.
Jury Duty Employees called for jury duty are allowed the time off. The company will pay employees the difference between their regular pay and what they receive from the court, up to a maximum of 10 days every two years.
Military Leave When an employee has a military obligation, the company will follow the rules set forth under the Uniformed Services Employment and Reemployment Rights Act (USERRA).
12 © 2010 society for Human Resource Management. douglas Reys, sPHR
USERRA protects service members’ reemployment rights when returning from a period of service in the uniformed services, including those called up from the reserves or National Guard, and prohibits employer discrimination based on military service or obligation. The U.S. Department of Labor’s (DOL) Veteran
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