After reading the Wilson Brothers case it was easy to see that there was is no compensation strategy in place. As an HR director I would start by revamping the entire system. There would need to be policies in place to form the compensation system. The Four main policies that I would start with would be internal alignment, external competitiveness, employee contributions and management. These four policies manage pay in ways that accomplish the systems objectives. (Milkovich et al., p. 10)

The question to address when looking at the internal alignment of the company is how should different types and levels of skills be paid within the organization. The Wilson Brothers have no form of internal alignment. The salaries of the employees that were hired in the past were all negotiated. There were no pay comparisons between jobs and skill sets within the company. Pay relationship within the organization affects employee decisions to stay in the organization. (Milkovich et al., p. 10) When looking to hire future employees for the company one should look at the Marginal Productivity Theory. This theory states, unless an employee can produce something of value from their job equal to the value received in wages, it will not be worthwhile for the employer to hire that employee. (Milkovich et al., p. 39) By applying this theory to the Wilson Brother’s company it would eliminate the need for salary negotiations among employees.

The second point to address is external competitiveness. External competitiveness refers to the compensation relationships external to the organization. (Milkovich et al., p. 10) As a HR director it would be wise to make sure that the pay is sufficient to attract and retain employees. I would want the employees of the company to stay with the Wilson Brothers not just because of who we are as a company, but also because we offer competitive