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Even prior to 2007, Circuit City stock prices from 2001 onward was always low Best Buy, and for the most part below Amazon and Walter. I would have to agree with Businesslike when it is noted the questionable significance of the cuts and if it even had a relation or affected the in-store customer experience. Additionally, Alternative explanations for this poor performance from Circuit City were not even considered. There could have been plenty of other reasons that could have been the fault that caused Circuit City to go down the drain. 2.

I do believe that the compensation changes at Best Buy could be a major reason for its current difficulties. By emoting 8,000 senior sales associates to positions that pay half as much is a red flag “no-no” Yes, this can cut labor cuts, but that can hinder productivity. They also plan to cut 400 corporate jobs, which in turn can take away talent that could help Best Buy move its way to the top. I believe the actions they are taking in relation to compensation are understandable in order to stay afloat but are a little drastic. 3. Walter, Cam’s Club, and Cost are doing better than Best Buy and Circuit City.

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This is because the way people are paid affects the quality if their work and their attitude toward customers. Walter, Cam’s Club, and Cost offer compensation packages and use pay models that work for them and have been ultimately effective as a whole for the employees and for the business. They do not necessarily have high pay. Between the three companies, they have starting wages between $8. 40 and $11. 00 an hour. It is noted that pay increases for Cost’s is the highest but have helped keep employee turnover well below that of Cam’s Club and Walter. 4.

There are larger problems in the competitive landscape for Best Buy that simply cannot be solved by compensation strategy changes alone. Yes, cutting labor costs an help a company but it cannot ultimately save a company if there are bigger, and larger problems effecting its downfall. For example, it faces slower sales of many of the items they sell such as TV’s and laptops. This is because of competition from discounted stores such as Walter or Target, or even online retailers such as Amazon. Com. This gives customers more options to shop around for the best deal.

Airlines mostly have competition among customer satisfaction, not price because flights are relatively similar across the board. As for Best Buy, they have competition based on price and that is a much bigger issue. This causes competitive labor costs not to be of equal importance in the two industries. Best Buy is a retailer while the airline industry is a mode of transportation. Cutting labor costs in Best Buy would have much more of an effect than it would for the airline industry. Review Questions 1 . Differing perspectives affect our views of compensation.

It does not mean the same thing to everyone. A person’s view can differ depending on whether you look at compensation from the perspective of a member of society, a stockholder, a manager, or an employee. Everyone is different. For example, an employee may have a different idea of what compensation is when compared to a stockholder. An employee may see compensation as a return in exchange between their employer and themselves, as an entitlement for being an employee of the company, or as a reward for a job well done. A stockholder on the other hand would have a different point of view.

Stockholders are interested in how employees are paid and some believe that using stock to pay employees creates a sense of ownership that will improve performance which will in turn increase stockholder wealth. Additionally, compensation becomes a great interest to stockholders when it comes to compensating the CEO. 2. I can definitely relate to the definition from the employees point of view. My personal definition for compensation is what I get in return for my hard work. This can be in the form of money, benefits, and relational returns. 3. M not quite sure what the network or returns that NUN offers my instructors, but I will make an educated guess. I believe that they receive total compensation and relational returns such as a favorable base pay and benefits including pensions, medical insurances, and bonuses. Also believe that learning opportunities are available to them in addition to challenging work, developmental opportunities, and recognition ND status. Think that returns such a base pay, medical insurances, and challenging work make a difference in teaching effectiveness.

However, if would add a return to increase the teaching effectiveness, I would add long and short term incentives. Money is always a great incentive to perform better. Incentives to try and have the class average above a certain grade could increase teaching effectiveness or a long term incentive such as the more students who find a job relating to the class they took could earn a cash bonus of some sort. 4. There are four policy issues in the pay model. They re: Internal alignment, competitiveness, contributions, and management.

The objectives in the pay model serve a purpose. The efficiency objective serves the purpose to improve performance, increase quality, improve customer and stockholder satisfaction, and control labor costs. The fairness objective calls for fair treatment for all employees recognizing both employee contributions and employee needs. Compliance serves the purpose to conform to federal and state compensation laws and regulations. Last but not least, the ethics objective serves the purpose to make sure the organization Ares about its results are achieved.

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