Texas Tech University Business Law Case Study

AlphaCo and BetaCo are both mid-sized pharmaceutical companies that employ over a thousand workers. The highest paid employees at each company are the executives and the senior level researchers.

This year, both companies have a raise pool of $5,000,000 – that is, each can raise the total compensation paid to all of its workers by a total of five million dollars.

AlphaCo uses $3,500,000 of its raise pool to increase pay for executives and researchers. Most of the other workers receive small raises, and some receive no raise at all.

BetaCo uses $3,500,000 of its raise pool to give everyone in the firm an equal 5% raise. Some key employees receive a raise of over 5%.

Remember to answer all three questions in the same provided text box, and write 500-1000 words for the total assignment (about 175-325 words per question).

Questions – Scenario #1

1. Which company’s raise pool allocation is more fair? Why?
2. Which company will have employees who are, overall, more satisfied? Why?
3. Which company is likely to outperform the other over the next year? Why?