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Fog Creek

In: Business and Management

Submitted By onealsteeler
Words 372
Pages 2
MGT 261
Case: How Fog Creek Software Pays Developers
1.) Fog Creek’s pay structure meets the legal requirements of equal pay for equal work effectively. Fog Creek pays all employees within the same skill level at the same pay rate. This eliminates the problem of finding an employee pay rate equilibrium, as all employees make the same rate, given they are on the same skill level. In regards to product markets, Fog Creek’s structure does not effectively meet these requirements. Due to the fact that Fog Creek pays all employees the same wage, and pays higher wages to keep good employee, their cost to make a product may fluctuate higher than their competitors. As far as labor market conditions, Fog Creek does meet those conditions by raising wages to match the going rate of the market for newer employees that may be hired on by the company. This means that they are staying current with the labor market changes in pay.
2.) I would say that Fog Creek’s pay structure is absolutely objective. Employees are placed in a certain level, based on skill, and all employees in that skill level are paid the same. This means that there are not discrepancies in pay from one employee to the next whom may have similar skill-sets. I believe that Fog Creek’s employees would also care about the integrity of the pay structure in regards to skill levels being assigned properly, as well as the evaluation process being proficient each year.
3.) If Fog Creek grew from a few dozen employees to hundreds of employees, the company may have to evaluate a more traditional standard of employee compensation and raises. With a small group of employees, equalizing pay based on skills would likely be rather easy. In evaluating and monitoring hundreds of employees, there will be a wider range of discrepancy between skill-sets. One employee may be more productive and efficient than another

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