Mark Wheeler Craftsman, Inc.

Executive Summary

In practical human resource economics, the desire to formulate an acceptable payroll, one that observes the interest of employees and appreciate the goals of the firm is becoming challenging. The primary reason is the inability of struggling firms to enroll their employees on mortgage programs. This paper will attempt provide a bail-out program for mortgage financing problems and as well provide a resounding income solidification plan on behalf of the firm. To achieve this, the paper borrows Mark Wheeler Craftsman, a struggling firm which cannot provide sufficient mortgage covers for its employees. The paper will be structured into three main parts. First, a close analysis of how employees should be paid, secondly, the paper will provide satellite bailout mechanism which can be applied by home loan borrowers as well as firm packages. Thirdly, the paper will attempt to analyze the relationship between falling values for houses and its effect on the overall payroll strategy.

How employees should be paid

Kimmel, Weygandt, & Kieso (2010, p. 624) argues that the magnitude of paying employees in a business depends on the health of the cash flow. The business should attempt to reconcile cash payments from financing, investing and operating before formulating upward changes in the payroll system. Modern day payroll systems should attempt to apply the hybrid payroll mechanism, one which attempts to observe advantages of time rate and price rate. This hybrid will attempt to look on the advantages associated with base pay. Base pay is pragmatic since it pays employees (executive and sales people not included) depending on the standard of living of a given area (Adelman & Marks, 2009). The logistics behind base pay is the ability to formulate internally equitable, externally competitive and affordable remuneration packages.

In relating to the hybrid system introduced in this discussion, the concept of merit pay cannot be ignored. Traditionally, merit pay (hybrid) has been applied inherently to administer base pay. This is the case with the importance of the individual to company (expertise plus workload), and the academic background. In a close analysis with the case alongside this document Mark being Mark Wheeler Craftsman, Inc; it is apparent the business is not BBB accredited. BBB accreditation looks largely on integrity and honesty concerns. So to it, Mark Wheeler Craftsman is not in a position to formulate increases in pay.  Therefore, formulating the payroll system grounding on Base Pay is sufficient to ensure aggregate contribution of all employees on aggregate (Adelman & Marks, 2009).

Credit and Payroll strategies alternatives during recession periods

A prime eminent challenge for emerging firms; for instance, Mark Wheeler Craftsman, Inc is employees committing their pay-slips in a mortgage contract. The derived challenge is the inability of the firm to unhook employees from the payroll during challenging times. Primarily, low income earners are subjected to the social fund or cash-limited fund where charges are astronomical (Adelman & Marks, 2009). To unhook these employees, Affordable credit and Seasonal employment contracts provide realistic methods to ensure that low income earners can be able to access loads, and the firms on the other hand are not affected by rapid changes in the credit market. Seasonal employment contracts will seek to salvage the firm from a redundant work force a common reflection of season products. However, while this will seek to salvage the firm from compelling financial challenges, it is prudent to establish that seasonal employment affects credit since low income earners will not be in a position to pay their loans.

Housing market panic instigates credit squeeze which will alter the general cost of doing business.  Companies will prefer to force layoffs therefore leading to higher house prices for consumers. In this analysis, there is a close interrelation between forces of demand and supply. Falling demand of houses due to unaffordable credit will inversely lead to falling supply of houses. Firms directly involved in making houses, will find cost of doing business high, and as a result, they will lay low their workers. Laid workers will become unemployed; therefore, with no significant source of income leading to a decline in aggregate demand. To manage this, firms should look on the possibilities of passing the mortgage burden to banks (Adelman & Marks, 2009). In this case, tools such as affordable credit should be applied by the federal system to ensure low income earners can get credit from the bank, and not through their pay-slips.

The relationship between dropping home values and payroll strategy

There is a significant relationship between house prices and the entire firm income; thus payroll. In America, house values are falling because millions of homeowners are defaulting to pay, and the only alternative option is selling the houses, a situation which took center stage in the year 2009. This has lead to an increase in supply of houses; therefore, dropping the market value of the houses. The resultant effect is the general standard of living of the employee will have dropped. Clark (2010, p. 158) argues that there is a necessity to ensure mortgage payments comes first; however, in a situation where an employee will not require to pay the mortgage, the excess revenue will naturally be retained on the employee salary. In the short-run, the payroll strategy will have less pressure on the employee real income.  Nonetheless, the employee will often find the employment dissatisfying. As a result, quite a significant number of employees may leave current occupation; this henceforth affecting the overall payroll strategy (Adelman & Marks, 2009). However, in the long-run the after recession and economic improvement, employees will heavily recommit their pays-slips on the mortgage contract this; therefore, appreciating the value of the houses. Conversely, dropping home values will often decline beyond the value left on home loan, in most cases, borrowers will have to solicit alternative options; for instance, government-sponsored bail out options..

Conclusion

This essay has been instrumental in examining the behavioral changes between the housing market and firms’ payroll strategy. The paper has examined has borrowed Mark Wheeler Craftsman, Inc case, justifying that most American firms are not in position to cater for their employees mortgage commitments. In response, the essay has borrowed Affordable credit and Seasonal employment as bailout plans to be applied by borrowers and firms in the goal of servicing loans while the firm manages their wage bill promptly. In encapsulation, the paper has attempted to inter-relate behavioral between home values drops and their impact on payroll strategy.

References

Adelman, P. J., & Marks, A. M. (2009). Entrepreneurial finance (5th ed.). Upper Saddle River, N.J.: Prentice Hall.

Clark, K. (2010). The Story Behind the Mortgage and Housing Meltdown: The Legacy of Greed.

New York: Author House.

Kimmel, P., Weygandt, J., & Kieso, D. (2010). Financial Accounting: Tools for Business

Decision Making. New York: John Wiley & Sons.

 

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