HRM 4003 Module 3 Compensation and Benefits Proposal Example

Two Dollars Behind the Drugstore: A Compensation and Benefits Proposal for Grocery Pharmacy Technicians

Student Name

American College of Education

HRM4003: Fundamentals of Human Resource Management

Module 3 Assignment

Instructor Name

March 1, 2027

Introduction

Back in Module 1, the staffing forecast I prepared for our grocer's human resources office found pharmacy technician turnover at 35 percent a year and a need for about 16 technician hires by spring 2028. Exit interviews point to two causes: pay below nearby drugstore chains and schedules posted too late to plan around. Schedules were addressed in Module 1. This paper addresses pay and benefits. It compares the chain's technician pay with the market, explains why the gap matters, proposes a new pay structure and two benefit changes, estimates the cost and offsetting savings, checks the legal points and sets out how the results will be reviewed.

Current Pay and the Market

The chain pays new pharmacy technicians $17.75 an hour, and its 18 technicians average $19.10. Raises are given at the store manager's discretion, so two technicians with the same experience can differ by more than a dollar. Nationally, pharmacy technicians earned a median of $22.00 an hour in 2025, with about 44,700 openings expected each year through 2035 (U.S. Bureau of Labor Statistics [BLS], 2026). A local check of 22 job postings within fifteen miles of the chain's stores, gathered in January 2027, showed drugstore chains starting technicians between $19.50 and $21.00, hospital outpatient pharmacies starting near $21.50 and certification premiums of $1.00 to $2.00 an hour. The chain is roughly two dollars an hour behind the drugstores that recruit its technicians.

Why the Gap Drives Turnover

Equity theory explains why a two-dollar gap matters more than its size suggests. Adams (1965) proposed that people compare the ratio of what they receive to what they contribute with the same ratio for others, and that perceived inequity pushes them to restore balance, including by leaving. Technicians know what the drugstore down the road pays, because many have friends there. Williams et al. (2006), in a meta-analysis of pay satisfaction research, found that how employees judge their pay against what they believe they deserve and against others' pay shapes their satisfaction, and that lower pay satisfaction is linked to turnover intentions. Evidence from minimum wage increases points the same way: Dube et al. (2016) found that higher required wages reduced turnover among low-wage workers, with fewer separations and hires.

Proposed Pay Structure

The proposal replaces discretionary raises with a published range of $19.50 to $25.50 an hour in seven steps. New technicians start at step 1, $19.50, matching the drugstore market. They move to step 2 after six months of satisfactory performance and one step each year after that, so a technician reaches the top after about six years. Current technicians will be placed on the step that matches their years of service, with no one receiving a cut. Technicians who hold national pharmacy technician certification will earn a premium of $1.50 an hour on top of their step, and the chain will pay the exam fee for technicians who pass. The published range makes pay predictable and removes unexplained differences between stores.

Benefit Changes

Two benefit changes are proposed. First, part-time employees who average 20 or more hours a week will become eligible for the chain's dental and vision plans and for the 401(k) employer match, which currently start at 30 hours. This matters beyond the pharmacy, since 60 percent of the workforce is part time, and federal rules already require retirement plans to let long-term part-time workers make their own contributions. Second, the chain will expand its tuition support from $1,000 to $2,500 a year for employees pursuing credentials related to their jobs, including technician certification, meat cutting and management courses. Both changes support the pipeline goals in the workforce plan. Medical coverage stays at the 30-hour line that federal employer rules use to define full-time status, because extending it lower would roughly triple the cost of the change.

Cost Estimate

Placing the 18 current technicians on the new steps raises their average rate by about $1.90 an hour. At roughly 1,950 paid hours each a year, that costs about $66,700, or about $71,800 with payroll taxes. The certification premium, for an estimated ten certified technicians in the first year, adds about $29,300, or $31,500 with taxes. Exam fees and added tuition support for technicians come to about $6,000. The part-time benefit change, which reaches beyond the pharmacy, is estimated by the benefits broker at about $118,000 a year, depending on enrollment. Total first-year cost for the full proposal is about $227,000, of which about $109,000 is the pharmacy portion.

Offsetting Savings

The pharmacy changes will not fully pay for themselves in direct savings, but the offsets are substantial. The chain estimates that replacing a pharmacy technician costs about $6,500, including recruiting, about six weeks of reduced productivity and pharmacist time spent training. Cutting turnover from 35 to 20 percent would avoid about three replacements a year, saving about $19,500. The larger savings come from overtime and lost business: last year the pharmacies paid about $41,000 in technician overtime to cover vacancies and closed early on 23 days for lack of staff. Pharmacy customers also shop the rest of the store, so lost pharmacy hours cost grocery sales too. Even counting only overtime and replacement costs, the pharmacy changes recover more than half their cost.

Legal and Fairness Checks

Several legal points were checked. Pharmacy technicians remain nonexempt under the Fair Labor Standards Act, so overtime for a certified technician must be figured on the base wage plus the $1.50 premium, not the base wage alone. The new range applies to all technicians regardless of sex, and placing current staff by years of service will be reviewed to confirm that no pay difference between men and women in the same job remains that cannot be explained by seniority, merit or another factor other than sex, as federal equal pay law requires. Benefit eligibility rules will be applied uniformly and written into the plan documents. Finally, because raising technician pay could create tension with other hourly roles, the chain will review meat department and deli pay ranges next year using the same method.

Communication and Review

Technicians will receive individual letters showing their step, their new rate and the path to the top of the range, followed by a meeting with the pharmacy manager to answer questions. The full range will be posted in each pharmacy. The proposal will be reviewed after twelve months using four measures: technician turnover, overtime hours, days with reduced pharmacy hours and the number of technicians certified. The market check will be repeated each January, and the range will be adjusted if the drugstore starting rate moves by more than fifty cents. Store managers will be briefed a week before the letters go out, so they can answer questions from employees in other departments who ask why pharmacy pay changed first.

Conclusion

The chain pays its pharmacy technicians about two dollars an hour less than nearby drugstores and has the turnover to show for it. Equity theory and research on pay satisfaction and wage increases explain why. A published seven-step range, a certification premium and broader benefits for part-time staff would cost about $227,000 in the first year, with the pharmacy share partly offset by lower overtime and turnover. Module 4 will build the training and performance system that supports the new steps.

References

Adams, J. S. (1965). Inequity in social exchange. Advances in Experimental Social Psychology, 2, 267-299. https://doi.org/10.1016/S0065-2601(08)60108-2

Dube, A., Lester, T. W., & Reich, M. (2016). Minimum wage shocks, employment flows, and labor market frictions. Journal of Labor Economics, 34(3), 663-704. https://doi.org/10.1086/685449

U.S. Bureau of Labor Statistics. (2026). Pharmacy technicians. In Occupational outlook handbook. https://www.bls.gov/ooh/healthcare/pharmacy-technicians.htm

Williams, M. L., McDaniel, M. A., & Nguyen, N. T. (2006). A meta-analysis of the antecedents and consequences of pay level satisfaction. Journal of Applied Psychology, 91(2), 392-413. https://doi.org/10.1037/0021-9010.91.2.392