Compensation Management-A Study On AT And T

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Question :

Open University Malaysia


The purpose of this assignment is to enhance learners’ ability to evaluate the factors that are important in the determination of salary and wage payment rates  to employees of a selected organisation.


Select an organisation of your choice and evaluate the factors that are important in the determination of the salary and wage payment to the employees so that they will be protected and not oppressed by their employer. Then, discuss what would happen if the employer did not pay in accordance to the stipulated acts related to compensationand recommend methods employer  can use in  the determination of payment rate of salary and wages to their employees.

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Answer :


Name of the organization is AT&T. American Telephone and Telegraph Company the full form of (AT&T). AT&T Inc. is an American multinational telecommunications conglomerate. It has its headquarters at Whitacre Tower in downtown Dallas, Texas. AT&T is the world’s largest telecommunications company. The type of business they run is telecommunications. They provide telephone and broadband services in United States. The origin of AT&T is from the original Bell Telephone Company founded by Alexander Graham Bell after his invention of the telephone. A network of subsidiaries established by AT&T in the United States and Canada that held government authorized phone services monopoly, which formalized with the Kingsbury Commitment, in most of the twentieth century. This monopoly called as the Bell System. At that period, AT&T knew by the nickname Ma Bell. The former AT&T was the world’s largest phone company for a very long time. In 2016, the consolidated report of revenue of AT&T was $163.8 Billion.


 The wages of the employees depends on the employee’s experience as well as their capability to serve the company. The factors on which the employee’s remuneration or wages are considered are the most important one is the ability of the company to pay the employees. It based on the demand and supply of the services and products of the company. The wages, which the company pays to the employees, also depends on the market rates. The cost of living of the place is also a factor on which the salary is decided. Wages can base on the trade unions that are if the trade union is higher than the wage rate also goes high. Productivity of a company is also a factor on which the salary of the employees based, as the productivity increases the salary of the workers also increases. (Schumacher Grigsby Vesey, 2015) Government regulations need consideration while deciding on the salary of the employees. For better lifestyle and higher living standards, the wage rate also varies from time to time. Sometimes the wage rates depend on the employees also, as if if the employee is over qualified then the employees decide their salary after negotiation with the company. Skilled and unskilled labors have their salary according to their skill. Hence, wages depends on an employee’s skill. 

The second largest provider of mobile telephone services is AT&T; it also provides DSL Internet access and wireless service so, the employer's needed in the company will be highly skillful and will have better efficiency for this purpose the wage rate here is high.  This company also provides fixed telephone services in the United States and provides broadband subscription television services through DirecTV. In Texas AT&T is the third largest company. The company’s main objective is to connect everyone to the world where everyone lives and work. AT&T vision and mission is to become the most admired and valuable company in the world. AT&T has a goal to improve customer’s individual lives and to construct their business more flourishing by conveying to the market exciting and valuable communications services, building shareowner importance in the process. The number of employees AT&T has each year from 2007 to 2016 is in 2011 AT&T had around 256,420 employees. In 2012 the number of employees dropped by around 15,000 to 241,241810.  

 The factors which determine and influence the determination of salary and wage rate In AT &T Company are as follows-

  1. Ability to pay- Being a top company in America it is very evident that ability of the company to pay wage will affect the wage and salary rate of the employers as the company is well established it has a attractive wage rate to attract good employers which will better its service.
  2. Demand and supply- Being situated in Dallas Texas, this American companies wage rate also depends on the demand and supply of the labor market it demand skilled labor so when the supply of such labor is less in the market the salary rate is increased in order to attract the skilled labor in the market (Ehrenberg, & Smith, 2016).
  3. Prevailing market rates- This enterprise cannot ignore this factor the company will offer higher wage rate when the market value is high and will also pay lower rates when the value is low. It is an important factor and hugely depends on the demand labor market and rates in the market.
  4. Cost of living-  In any organization the wage rate is also fixed keeping in mind that the workers get their fair wage and that the cost of their living can be incurred properly. The wage rate is fixed in the company by computing whether the employee can ensure minimum standard of living. 
  5. Bargaining of the trade unions- The wage rates in this company is also affected by the bargaining process of the trade union. As the trade union here is stronger the wage rate is higher. The trade union here consists of many members. The unions act in the welfare of the employees.
  6. Productivity- the Company’s productivity is a point on affects the wage rate of the company. The amount of skilled labor needed in the company is high because it renders better service and produces the better which enhances the labor rate.
  7. Government Regulation: To improve the working environment and for the better conditioning of the worker the government also implements some regulations which affect the wage rate and also fixes a specific rate of growth in this wage rate which also affects the wage rate of the AT&T company (Keynes, 2016).
  8. Cost of training- In determining different wages the company also gives some allowances which help the employer in living a better lifestyle and living standards. These allowances may differ from labor to labor so it also affects the wage rate.
  9.   Personal perception of wages- The demand of the labor also affects the wage rate. It depends on the labor that is carrying out the job the rate will be fixed by him and the company will negotiate on his desired wage this is also an element which affect the wage rate.
  10.  Skilled and Unskilled labor- The wages received from the company to skilled is more than that of the unskilled labor. So the wages also depends on the skills of the labor and the more skillful the labor is the more the rate of wage will be high and vice versa. 


  1. In the case of any failure of payment within specified      time frame:       AT & T inc. is an American multinational organization providing      services in the field of telecommunication. Many companies are going      through a tough situation paying wages to their employees. If any employee      is suffering from an issue in relation to their wage payment or vacation      pay, they have the right to lodge a complaint against the organization at      the state employment agency. The employment agency goes through an      investigation on the matter and if the matter is proved to be viable the      employment agency has the right to file a lawsuit against the organization      or cancel the business license of the employer. If AT & T fails to pay      the employees according to the stipulated acts and time similar actions      will be taken by the employment agency (Bolle,2016). Employee compensation refers      to the insurance which the organization provides to its employees which      further includes providing health benefits and wage replacements. The      employee can file a suit claiming the payment of wages. The organization      should secure its employers by providing them insurance regarding their      health and also provide services to them.

The wages rate of any employee is set by the employer at the time of joining the concern. Failing to pay wages is considered as a crime and certain laws support the termination of the employer in this regard. Payment of wages is set on certain dates by the state laws. 


2. In case of withholding of wages of employees intentionally: AT & T can held liable if it fails to pay its employees on time and provide them with the basic benefits. AT&T is legally obligated in paying the wages to their employees. AT & T cannot withhold any portion of their employee’s salary without the consent of the employees. If any employee gets into any litigation with the company even then it cannot withhold the salary of the employee. The department of labor has the ability to bring back a private lawsuit to recover its wages (Conley,2014). The law states that any organization failing to pay wages to their employees on time is liable to get into litigation. AT & T on the other hand has to deliver all the required ailments to its employee within the stipulated time. 

The employee can file a suit against AT&T in accordance to the failure of the payment of wages. AT & T may change its payday schedule without violating the FLSA rules about prompt payment of wages to employees only if it is made for a definite reason affecting its business.     Paying wages to the employees by the employer is a duty failing which arises many consequences as the employee has the right to file a suit against the employer under the employment act. The compensation act ensures the wage payment of the employees who are injured during their job hours or disabled on the job. AT &T can be imposed with a huge amount of penalty if  it fails to meet the employee's expectation from the organization. 


3. In case of an Unpaid Overtime Compensation:

  Fair Labor Standards act(FLSA) elaborately defined and standardized the ethical status of a employer and in prosecution of any violations will lead the company to undergo penal actions, even imprisonment. Employers of AT&T Inc. are liable to pay a substantial penalty amount or may lead to liquidated damages and shortfall if he violates the demonstration of overtime compensation or minimum wage. Employers are supposed to comply with the salary- and benefit related contracts in order to avoid both personal responsibility and FLSA violations. Distinctive features of workers and independent contractors have been illustrated in FLSA in order to avoid misclassification for the employers. Employees who have served the company for more than forty hours each week were supposed to be paid extra on separate paycheck basis with no overtime pay which is known as “other pay” in corporate terminology. Employers transcending this principle are liable to receive a permanent injunction along with charges of potential fines. It is very difficult but imperative for employer to determine the eligibility of an employee to go overtime since only them are liable to be paid an amount at least one-and-a-half times of their declared salary. Violation of this may enable an employee to lodge a personal litigation for payback and equivalent liquidated damages. In case of an intentional violation, with a mandatory three-year statute limitation, the employer is liable to suffer a criminal prosecution along with potential financial penalty (Jolls, C. 2013)

4. In case of conduct of audits:

Auditing of the financial reports of the company forms a very essential part of the in the verification and in getting the authenticity of the financial reports. It is important to conduct proper audit of the overtime wages and timekeeping policies of every organizations in order to maintain the fairness of the financial reports. If the company is not in compliance with this task, then in that case the organization will be liable to face certain legal consequences and it will tends to hamper the performance of the organization as whole (Schömann, I. 2014). Proper calculation of the working hours spent at the union shops should be rectified in order to maintain proper records of the financial reports. If proper records of the operations of the company not maintained then it may lead to significant material misstatements in the books of accounts. In the process audit, several steps are involved that includes checking of the overtime wages, leave salary, housing allowance, dearness, etc. any error in this line items in the financial reports of the organization may also leads to detection error which may hamper the financial status of the company. In this regards, proper reports are to be submitted to the auditors of the organization so that, he is abl4e to evaluate on the financial status of the organization. Leave encashment should be properly rectified and calculated before presenting in an audit report (Barrett, B. 2016)


The salary and wage rates in AT&T are determined through following methods: 

  • Conducting salary surveys - if one doesn’t have any idea about the salary that other employers are paying to their employees then it is very much problematic to decide the pay scale. So, it is very much necessary to conduct a salary survey for purpose of designing a pay structure. The conduction of a salary survey acts as a key role in the determination of the prevailing salary rates that other employers are providing for a particular job. The information’s collected from the survey helps in the establishment of standards. This conduction of survey can be done in two ways - the first is through the use of internet, telephone and newspaper, that is, through informal ways. The second one is through the appointment of any external agency that is formal way (Berri, Leeds & von Allmen, 2015). 
  • Determining the worthiness of each job - another method to determine salary and wage rates in AT&T is through determination of the worthiness of each job. It is a formal and systematic method to compare the worthiness of jobs from different jobs which will ultimately aid in setting the structure of salary. The fundamental principle in the evaluation process for jobs is that jobs which demand higher level of qualification and responsibilities should be paid higher salary as compared to jobs with lesser requirements. The main elements that a job contain are the element of skill, responsibility, efforts etc. the compensable factors is different for every client. 

There are different methods for the function of job evaluation is as follows - 

  • Job ranking method - under the method for job ranking, different jobs are put in a order, and this order ranges from a highest point to a lowest point. A constant factor, for instance, an overall value of the organization is of key use in this ranking method.
  • Job classification method - under this approach, different jobs are categorized into various groups and every group have a rank that is assigned for the jobs (Ghanbari & McCall, 2016). 
  • Assessing competitiveness of pay scales - the competitiveness of the pay scale proposed are evaluated in this method. It is also speculated that whether the job is in order along with other jobs that demand similar kind of experience level and expertise level. This can be done through subscription to different employer’s surveys which were conducted by different compensation research institutes. These surveys must be of current researches and it should directly point to the industry of telecommunication, that is, the industry in which AT&T lies. 
  • Creation of pay grades - In this method for determining salary and wage rates, a pay grade is created. A pay grade contains of different jobs which falls on the same importance level. The function of classifying jobs is done differently in different methods. In the point factor method, the pay grade is comprised of jobs that fall between a ranges of equal points. Likewise, in the job ranking method, the pay grade is comprised of all those jobs that fall between two or three ranks. In the classification method, the jobs are automatically classified into several classes and/or grades. And in the method of factor comparing the pay grade consisted of a particular limit of pay rates (Booth, 2014). 
  • Assignment of pay rates - under this method, the assignment of pay rates or prices to each pay grade is done. However, if any person doesn’t choose to slot jobs into different pay grades then he or she has to incorporate each pay rates to their respective individual job. There are different methods followed in this assignment of pay rates to the pay grades and one of those methods is the use of salary or wage curve. The curve shows those pay rates which are paid for jobs in each pay grade in a particular time. The aim of using the wage curve is to illustrate the relationship between value of jobs and the prevailing average pay rates.
  • Creation of pay structures - through the generation of pay ranges, different pay structures are created under this method. Each pay ranges are nothing but series of steps within the limit of pay grade and this based on many years of service. Usually, salary or wage line is used to control the pay rate for each particular pay range. In today’s world, most of the employers do not pay merely one rate for all of the jobs in a specific pay grade. The appearance of pay ranges often occurs in the shape of vertical boxes in each grade which will further show the lowest pay rate, the highest pay rate and the middle or average pay rate of that specific pay grade (Kaur, 2016). 
  • Determination of effects of experiences, tenure and credentials - salary and wage rates can be decided through determining the way experiences, tenure and credentials affect the wages of the employees. Census records of the employees are obtained to look into the matter that whether employees who are working for long term are properly compensated or not. This involves checking opportunities for training to make decisions about jobs for which employees receive higher level of compensation. 


In  the light of this effort, a research study has been conducted regarding wage payment, protection and compensation management and this apparatus has been exploited on the backdrop of AT&T Inc which is the largest multinational telecommunication conglomerate. This research module has posed an extensive comparative study in order to evaluate the influential parameters which enables the company to determine the wages and salary. The research study has also set guidelines as to what steps can be taken by an employee in accordance to the violation of wage payment by At & T Inc.  It prevails in a number of concerns as a result of which these concerns are getting into litigations. Prevailing wage management acts in United States has been thoroughly revised hereby and brief discussions of the immediate consequences driven by the violation of those acts have been included (Jolls,2013).The standards of  Moreover, apprehensive recommendations in order to avoid the violation of the stipulated acts have also been encouraged.