In the late 1990s, the compensation plan at Beta provided for base wages about 20 percent below wage levels for similar jobs in Lafayette.But half of company profits were paid out each quarter as a fixed percentage of employee wage.Distributed profits averaged more than 50 percent of base wages.This caused average total compensation at Beta to be 20 percent above that of the area.Because of the high pay,Beta remained a popular employer,able to take its pick from a long waiting list of applicants.
Benefits were kept to a minimum at Beta.There was no retirement plan and a very limited medical plan designed to cover catastrophic illnesses only.Employees considered this a good bargain,though,in light of the above-average compensation.
profits were down markedly in 2002,and the profit-sharing bonus was less than half the historical average.Earnings dellined further for the first two quarters of 2003.By midyear,it was clear the company would be in the red for the entire second half.A board meeting was called in late August to discuss the profit-sharing program.One director made it known that he felt the company should drop profit sharing.The human resource director,Vince Harwood,was asked to sit in at the board meeting and to make a presentation suggesting what the company should do about compensation.