Rationale behind Selection of Competitors for External Benchmarking: FastCat is a growing company with revenues of $36.5 million and net income of $8.9 million. It is a relatively small company with 200 employees. But it is currently pitched against large companies like IBM, Oracle and SAP. Also it has adopted a three pronged strategy for expansion with focus on innovation. So, for the Administrative/maintenance department we have chosen small and medium size companies because we dont really need to match the large companies for this department as currently, the same is not that relevant for the organizations strategy. The customer department and the quality assurance department are relatively more important with respect to our strategy. Hence we have chosen medium competitors for benchmarking. The technical development and R&D and implementation department are very important for us because our strategy relies on innovation which is provided by these departments. Hence we have benchmarked them against medium and large companies. In case of Administrative/Maintenance department, we have chosen all types of companies because this job will not vary much across industries. For the customer department, we decided to benchmark with all companies except those in manufacturing sector because in manufacturing, different type of marketing skills are needed which are not relevant in our case. For all the other departments we have chosen competitors from software sector because in these departments we need specialization in software so as to carry out innovation and ensure customer satisfaction.Also with reference to ROA, we have selected only those companies for benchmarking which have a positive because companies with negative ROA are either using an ineffective compensation system or are not utilizing their capital efficiently.Rationale behind Other Choices:Trending/Ageing:Trending of survey data has not been done as per the instructions.Compensation Metric: Administrative/Maintenance Department: Total compensation 25th percentileFastCat does not aim to lead in compensation for this department as per its strategy. Also it does not require the top talent in this department. Customer Department: Total compensation 50th percentileThis department is relatively more important for FastCats strategy because t is planning to introduce new products which will need the support of this department. Hence it is requires to have a match policy. Technical , QA and R&D and Implementation Departments:75th percentile of totalCompensationThese departments are critical for FastCats strategy because they are the ones that drive innovation and ensure customer satisfaction which are absolutely necessary for Fastcat to follow and succeed in its strategy.

Policy Lines:For all the departments, a lead/lag percentage of +10% and -10% has been chosen in accordance with the strategy and objectives of FastCat.Grades and Ranges:We have chosen to implement grades and ranges instead of broad banding because currently FastCat is not that large. It has only 200 employees. Bands are used in a relatively flat organization which is not the case with FastCat. Also at this point of time we dont think cross functional growth and development and lateral movements are of very high importance. The grades corresponding to different job evaluation points are depicted in the table given below:

GRADEIIIIIIIVV

JE POINTS20-3536-5556-7070-8485-100

RANGE2023283032

The range is being increased as we go up in the grades because at higher grades, we need a greater scope for salary increment without promotion to keep employees at that level motivated enough to give their full efforts. Also the range for lower grades like grade 1 has been kept relatively broad because we do not have a large number of roles to provide promotions in these grades, so to retain and motivate them we have used higher ranges. Another reason to do this is to facilitate hiring at lower salaries.