Christian SalazarUH ID: 0979809Chapter 9 Case Study 1 and 2Case 1: This case is about a small business owner named Katie Perkins which after graduating college started a small mail-order golf equipment business which she named Performance Sports. Perkins’ business grew and now she is dealing with hiring a new managerial position of a purchasing agent. Her dilemma is what wage to set for this new position. 1. What factors should Perkins and Balkin consider when setting the wage for the purchasing agent position? What resources are available for them to consult when establishing this wage?Perkins and Balkin should consider when setting the wage for the purchasing agent position the type of wage options. As the case stated one factor that should be considered is the pay-for-performance as an option for the position. Also Perkins and Balkin should consider all of its employees and if they see that one them has the potential to fill that position by hiring withinthe company. Resources like wage surveys and looking at the wage curve can help them see what would be the appropriate wage for this position. 2. Suggest advantages and disadvantages of a pay-for-performance policy for Performance Sports.Advantages of a pay-for-performance policy for Performance Sports are a raise in productivity and lower labor costs. Motivation for employees to perform will increase and employee satisfaction with the job. Disadvantages of a pay-for-performance policy for Performance Sports can be higher wage costs for the company, not measuring correctly the employee’s output, the monies to be allocated for compensation increases, and when the payments will be made to the employees. Also if a recession period takes place for the company as a whole, this can affect the pay-for-performance. 3. Suggest a new payment plan for the customer service representatives.A new payment plan for customer service representatives may be giving them the optionto choose the pay-for-performance. Also Perkins can also reward her customer service representatives with bonuses, commissions, giving the employees half a day off with pay every week depending on how much business the company is doing to keep the customer representatives happy.Christian SalazarUH ID: 0979809Case 2: This case is about a CEO owner of Costa Vida and his decision to convince his franchise owner across the United States to increase pay for its employees to be competitive with its competitors while keeping their employees. 1. Why is it important for pay to be externally fair? It is important for pay to be externally fair due to labor market conditions, area pay rates, cost of living depending on what location the franchise is located, collective bargaining, and as well as legal requirements. 2. Why is it important for pay to be internally fair?It is important for pay to be internally fair because each franchise needs to know the compensation strategy of the organization, what each position is worth in hourly or salary wage, and the owner’s budget and how much they can truly pay the employees while maintaining budget.3. What should Costa Vida’s compensation strategy look like? Hint: what are the company objectives and how can employee pay help to achieve those objectives?The Costa Vida’s compensation strategy should include employee retention for continued growth, compensation distribution to ensure employees feel treated fairly, communication of compensation methods to increase employee understanding of the company’s objectives and adherence to a budget for cost efficiencies. 4. What should the pay structure look like? The pay should structure should reflect the internal wage relationship between job and skill level. The franchises pay position relative to what competitors in their area are offering is also another way the pay structure should look like. Pay can also be distributed on the basis of flexible work schedules, paid vacation, free meals and bonuses. 5. How should Nathan communicate a new compensation strategy to his franchisee owners and managers?Nathan should communicate a new compensation strategy to his franchisee owners and managers by having team meetings with franchise owners and discussing to them the importance of this new compensation strategy Nathan is proposing. He should change the policyfor the organization as a whole and insist the franchise owners implement it in order for him to effectively communicate the new compensation strategy he is proposing.Christian SalazarUH ID: 09798096. What effect will paying higher wages have on Costa Vida in the short term? What effect will it have in the long term? Costa Vida paying higher wages in the short term will obviously result in lower profits forthe franchises and higher stress for the franchise owners in balancing their budget. In the long term it will mean lower employee turnover, the In-N-Out Burger franchises staying on top of the competition, and an opportunity for more locations to be