Growing Pains

Recommendations:

• Maher needs to take a pay cut so that he can restructure his employees compensation plan to make it more rewarding and so that they can stay for a longer period of time
• Maher needs to have a conversation with Carter to figure out what exactly she is looking for and how he can compromise with her on a package that is ideal. Her new compensation plan needs to  consist of higher salary base pay, quarterly bonuses, more vacations and equity in order for her to take Maher’s offer seriously
• New compensation plan needs to include more vacation days for all employees
• Carter should be promoted to CFO where she can focus her efforts on the reinventing the finance strategyfor the company. She can determine  the new direction the company should take based on market trends, projections, and forecasts and can help Maher in creating the perfect business strategy for Waterway. The current CFO, who seems mainly motivated by money, can be offered a buyout or severance package to leave the company.

Assumptions:

• Maher does not have a well-defined business strategy and is unsure of the direction his business is heading to in the near future.
• Maher wants to continue to reap the company benefits (high salary plan for himself) without rewarding his employees appropriately (equity options, higher salary, etc.)
• Maher’s employees feel that they are being underpaid
• Carter feels unappreciated and feels that her hard work and effort is going unnoticed. It seems as if the main thing she is looking for is higher pay and equity position.
• Maher is afraid to pay his employees more because he is afraid that the kayak market will soon reach a decline and he will lose money in the long term.
• Maher doesn’t understand that his employees values have changed. He wants to continue believing that what they valued years ago, they still have the same values.

Key facts/Data:

• Professional staffers received a salary and a year-end bonus – 10 to 15% of their pay
• Controller made $65,000
• Office Administration Manager made $39,000
• One designer made $48,000
• Another designer made $53,000
• Maher made $150,000
• Carter made $51,000 plus a yearly bonus of between $15,000 and $19,000 to make up for not paying a commission on her sales
• Carter is responsible for 40% of the company sales over the past two years
• Waterway employed 45 people – turnover was low