Compensation and Benefits Plan Our team has been asked to develop some compensation and benefit recommendations for our client based on their planned expansion to Arizona. The expansion in Arizona will increase the number of employees to 130. Annual revenue is expected to increase the first year to $10,300,000. Currently, there are 41 commercial construction projects in Arizona, and it is recommended the company pursue commercial retail. (Commercial Construction Projects in Arizona, 2013) . The team’s recommendation is based on; market evaluations of similar companies, Arizona pay and benefits laws, and a company structure to create a compensation and benefits strategy. Sundt Construction, a medium sized construction company headquartered in Tempe Arizona, was founded in 1890 by Mauritz Martinsen Sundt. Sundt offers their employees a somewhat generous compensation package which includes not only the basics of retirement and health care, but also added perks such as continuing education (The Sundt Exprience, 2013).
Sundt offers a generous health care plan which includes vision care and prescription benefits. Sundt offers several different medical plans to include one plan that has no monthly premium charge (because of employee ownership) for employees and their dependents which is a Preferred Provider Organization (PPO) network. Sundt maintains a wellness where employees receive a $350 credit for health expenses related to improving or maintaining health. Sundt provides benefits such as life insurance and disability insurance which can cover up to 60% of their salary prior to a disability. The total comprehensive package also includes a paid time off program for sickness, vacation, and personal days and includes an employee discount program for certain services (The Sundt Exprience, 2013).
Sundt offers an Employee Stock Ownership Plan (ESOP) to employees after 1,000 hours of credited service during their first year of employment. Employees receive annual dividends (depending on the company’s performance) which are deposited directly to employee owner accounts. In addition if an employee maintains a 401 (k) plan, the company will match contributions which enable more earnings in the ESOP as well (The Sundt Exprience, 2013). Continuing educational opportunities are provided within the company to help employees grow in their careers. They not only provide courses in marketing and project management but also promote the Sundt Talent and Recognition Program (START) and the Leadership Excellence Accelerates Program (LEAP). START is a leadership program to ready early-career employees for roles as supervisors and middle managers. The LEAP program helps managers and supervisors improve on the skills already attained. The program enhances business management skills as they relate to Sundt Construction and fosters leadership and teamwork skills.
Gilbane Inc. is a construction firm that is headquartered in Providence, RI and was established in 1873. Gilbane consists of the Gilbane Building Company and Gilbane Development Company. The Gilbane Company has been selected three years in a row, for the “Best FORTUNE 100 Companies to Work For” 2009, 2010, and 2011 (Gilbane, 2013). The Gilbane Inc. location in Phoenix, AZ was established in 2001, employs over 65 people, and has constructed several national projects.
The Gilbane Corporation offers its employees numerous options for benefits. The basic listing of benefits includes: Health, Vision, Wellness programs, Domestic Partner coverage, Prescription Drug Program, Basic Life Insurance, Short and Long Term disability. Gilbane provides a 401(k) program as well as a retirement plan that includes profit sharing. The Gilbane Company provides a very interesting work/life balance program to include: Educational assistance, Flexible hours, Retail Discount Program, Paid Time Off, and these are just a few (Gilbane, 2013). Sundt and Gilbane are Arizona based companies and they, along with the new branch of the company will have to comply with state employment laws.
There are several laws related to benefits and pay the company will need to comply with. Arizona's current minimum wage is $7.35, which is the same as the federal rate. Federal overtime and break laws apply because Arizona does not have laws governing these items. Federal law does not require a meal period or breaks; however, if a company offers breaks, they are usually less than 20 minutes and must be paid. Meal periods are typically 30 or more minutes and do not need to be paid (Employment Law Handbook, 2013).
Arizona does not require companies provide vacation, sick leave, or holiday benefits. If an employer provides these benefits, it must comply with the terms of its established policy. Based on the Family and Medical Leave Act, Arizona employers may have to provide unpaid sick leave. An employer can require employees to work holidays and does not have to offer premium pay, unless the time qualifies for overtime. (Employment Law Handbook, 2013).
The company has to comply with Arizona employment laws governing an employee’s civil duties. An employer may not discharge or penalize an employee for complying with a jury summons, they are also not required to pay wages. Additionally, they may not require employees to use paid time off to comply with a jury summons. Upon return from jury service, an employee must be returned to their previous or a higher position. Employees cannot lose seniority while serving as a juror (Employment Law Handbook, 2013). Arizona requires paid time off to vote, but they must request the time off prior to the election. The company may specify the time employees can leave to vote.
There are a wide array of personnel required at the new office and salaries should be similar to Arizona rates. Employees will be compensated at an hourly rate. For budgeting purposes, benefits should be calculated at a rate of 27%. Based on similar sized companies, the recommended organizational structure is outlined in Diagram 1 and the pay structure is outlined in Table 1. The VP of AZ operations can receive a bonus of 5% of all project net income. Construction Manager and Construction Engineer should receive a bonus of 3% of the net profit from their projects. Site Engineers and Foremen should receive a bonus of 1% of the net profit from their projects. Skilled, semi-skilled, and general construction laborers should receive a bonus of .2% of the net profit from the project they complete. Bonuses for employees are only paid if the projects come in on time and within budget. If a project goes over either criterion, employees will not receive a bonus. Sales Staff personnel will receive a bonus of 3% net profit of all new construction projects they bring into the company. All employees are eligible for up to a 5% salary increase on their annual performance. Compensation is the primary benefit employees count on, but to keep quality employees the company has to offer medical benefits. It is recommended the company include medical insurance benefits for its employees. Medical insurance benefits should include both health and dental plans. It is highly encouraged the company gives employees at least three options to choose from for both health and dental insurance. The three coverage plans should cover basic visits, preventative care (dental), emergencies, hospitalizations, vision care, and professional services (therapist, podiatrists, psychologists, etc.). The premium costs should consist of a high, medium, and low plan. The high plan should be a high monthly premium with low co-pays. The medium plan should have an average premium and average co-pay and the low plan should consist of a low premium, but higher co-pay. Health care is one benefit the company should provide; life and accidental death or dismemberment insurance is another. It is recommended that the company offer life and Accidental Death and Dismemberment (AD&D) insurance for employees. The company should provide life insurance coverage to their employees, at the company’s expense. Life insurance coverage should be two times the employee’s salary. AD&D insurance should be an additional one time (three times total). Additional insurance should be offered for employees to purchase for themselves and their family. Although Life and AD&D insurance is a benefit employees will look for from a company, paid time off is important to many people. It is recommended the company give employees paid holidays and time off. Employees should receive six paid holidays; Christmas, New Year’s, Thanksgiving, 4th of July, Memorial Day and Labor Day. Employees should receive vacation time off on a graduated scale based on tenure. Employees with 0-5 years will accumulate 80 hours a year; more than five years, but less than 15-120 hours; over 15 years-160 hours a year. All employees will receive 24 hours a year for sick leave. Time off is a valuable benefit for employees and a comprehensive retirement program is very important in employee retention. The company should implement a 401(k) plan for their employees. Employees should be allowed to contribute up to 5% of their salary to a 401(k) program and the company should match their contributions up to 3%. It is highly recommended the company utilize several different funds based on the risk level for employees to select. Utilize a reputable companies to set up the 401(k) programs for the employees. A retirement program rounds out a competitive comprehensive compensation and benefits program for a company. Utilizing other companies’ benefits program as a baseline provided enough information to create a comprehensive benefits program for the company. The company needs to comply with the state and federal laws to ensure violations do not occur. Essentially, Arizona is very lenient when it comes to pay and benefit laws. Therefore, the company can provide as much or as little as it likes, as long as Federal laws are followed. However, in order to attract and retain quality employees, it is recommended that an attractive pay and benefits program be developed and offered. The team’s recommendation is based on; market evaluations of similar companies, Arizona pay and benefits laws, and a company structure to create a compensation and benefits strategy.

Table 1

Hourly Pay Rates for Arizona Employees, Including Benefit Compensation | Position | Number of Personnel | Hourly Rate | Benefits | Hourly Total | Annual Compensation | Executive Staff | | | | | | Vice President AZ Operations | 1 | $75.00 | $20.25 | $95.25 | $198,120.00 | Exec Admin | 1 | $26.00 | $7.02 | $33.02 | $68,681.60 | Adminstrative Staff | | | | | | Office Manager | 1 | $30.00 | $8.10 | $38.10 | $79,248.00 | HR Representative | 2 | $26.00 | $7.02 | $33.02 | $137,363.20 | Administrative Personnel | 10 | $18.00 | $4.86 | $22.86 | $475,488.00 | Marketing | | | | | | Marketing/Sales Manager | 1 | $38.00 | $10.26 | $48.26 | $100,380.80 | Marketing Staff | 2 | $26.00 | $7.02 | $33.02 | $137,363.20 | Sales Staff | 4 | $30.00 | $8.10 | $38.10 | $316,992.00 | Finance | | | | | | Finance Dept Manager | 1 | $35.00 | $9.45 | $44.45 | $92,456.00 | Accountant | 2 | $26.00 | $7.02 | $33.02 | $ 137,363.20 | Finance Staff | 4 | $17.00 | $4.59 | $21.59 | $179,628.80 | Contracting Staff | 5 | $26.00 | $7.02 | $33.02 | $343,408.00 | Operations | | | | | | Construction Manager | 1 | $35.00 | $9.45 | $44.45 | $92,456.00 | Construction Engineers | 5 | $27.00 | $ 7.29 | $34.29 | $356,616.00 | Site Engineer | 5 | $24.00 | $6.48 | $30.48 | $316,992.00 | Formen | 10 | $22.00 | $5.94 | $27.94 | $581,152.00 | Skilled Labor | 10 | $18.00 | $4.86 | $22.86 | $475,488.00 | Semi-Skilled Labor | 25 | $15.00 | $4.05 | $19.05 | $990,600.00 | General Laborers | 40 | $10.00 | $2.70 | $12.70 | $1,056,640.00 | | | | | | | Total Employees | 130 | | | | $6,136,436.80 |

(Salary.com, 2013)
Diagram 1
Arizona Organization Chart

References
(2013). Retrieved from Salary.com: http://www.salary.com/
Commercial Construction Projects in Arizona. (2013). Retrieved from McGraw-Hill Construction Dodge Lead Center: http://dodgeprojects.construction.com/Commercial-Arizona_stcVVcatId547793VVviewcat.htm
Employment Law Handbook. (2013). Retrieved from Arizona Employment and Labor Laws: http://www.employmentlawhandbook.com/state-employment-and-labor-laws/arizona/
Gilbane. (2013). Retrieved from Gilbane: Http://www.gilbaneco.com
The Sundt Exprience. (2013). Retrieved from working at Sundt: http://www.sundt.com/careers/working-at-sundt/