Sec A_Group 7
-
Upload
vijay-krishnan -
Category
Documents
-
view
220 -
download
0
Transcript of Sec A_Group 7
-
7/29/2019 Sec A_Group 7
1/13
THE CASE OFUNPOPULAR PAY
PLAN
Submitted By:
-A Sindhuja 12PGP001
-Aditi Bajpai 12PGP005
-Apurva Bajaj 12PGP010
-Kumar Saurabh 12PGP022-Sourav Mondal 12PGP042
-Pulak Jain 12PGP113
3/18/2013 Indian Institute of Management Raipur 1
-
7/29/2019 Sec A_Group 7
2/13
CASE SUMMARY:CHARACTERS
TopChem: 93 years old, $2 billion company
Gilbert Porterfield: VP for Compensation
Sam Verde: CEO of TopChem Sid Noble: Head of R & D
Ruth Gibson: Chemical Mixer on packaging
team Gus Tellar: Corporate Head of Training
3/18/2013 INDIAN INSTITUTE OF MANAGEMENTRAIPUR
2
-
7/29/2019 Sec A_Group 7
3/13
CASE FACTS
AIM: Todevelop a pay system congruent withthe philosophy of QFA
REASONS: Under QFA employees are
reorganized as product oriented teams so as toencourage employees and to develop cheaper,
faster and better products
PLAN: To divide the pay into two parts : Fixed : Based on Internal Equity
Variable: Based on performance of the group
3/18/2013 INDIAN INSTITUTE OF MANAGEMENTRAIPUR
3
-
7/29/2019 Sec A_Group 7
4/13
QFA PAY PLAN
BASE PAY : 75% of the former paydetermined by internal equity
FLEXIBLE PAY: 25% of former pay
determined by Teams ability to show 5% improvements in 4
areas: Quality
Unit Cost Market Speed To Market
Safety and Environmental Compliance
Divisional Financial Performance
3/18/2013 INDIAN INSTITUTE OF MANAGEMENTRAIPUR
4
-
7/29/2019 Sec A_Group 7
5/13
ISSUES Pay is on group performance, individual may perform better but
the group may not
Plant performance will affect the pay of R&D people
Lack of Time to implement it in short time
Customer Rating is not considered
Quality for all which is the main strategy of the company is not
properly reflected in the pay plan
Pay plan should not be the only tool for motivation
The numberslike 75% and 25 % are vague and doesnt have any
logical reasoning
3/18/2013 Indian Institute of Management Raipur 5
-
7/29/2019 Sec A_Group 7
6/13
ALL THESE ISSUES BOIL DOWN
TO
Problem with the proposed system So changes need to be suggested in the plan
Motivation is being linked to the pay So apart from the pay plan, overall system changes must be
suggested to increase motivation of employees
3/18/2013 Indian Institute of Management Raipur 6
-
7/29/2019 Sec A_Group 7
7/13
Solution 1: Continue with the present pay plan but include
perks (insurance, gifts or holiday plans) and other incentives
based on the performance. Also the company can include
Employee Stock Options.
PROS Increase competitiveness and
motivate employees to work harder.
Help to retain top performing
employees. Labor cost will be aligned with
productivity.
Employee Stock option will motivate
employees to work for achieving the
organizational goals.
Will create a culture of improvement.
The level of seniority will have less
bearing on compensation.
CONS There will be risk of favoritism.
Performance measurement will be
subjective so discrepancies may
happen. Will reward the top performers rather
than improving all employees.
Implementing performance based pay
will incur huge cost.
Does not include quality for all.
-
7/29/2019 Sec A_Group 7
8/13
Solution 2: Instead of only plant performance based
pay, plan is based on customer feedback and plant
performance both.
PROS
Customer is most important
stakeholder and so, more in line with
Quality For All program.
In the current proposed plant,
employees are being encouraged toplease their supervisors at the expense
of customers. This problem is going
to get rectified.
Encourages continuous learning and
participation in improvement will be
directly rewarded.
CONS
In the current form, including another
numerical goal of customer voice is
going to further complicate matters,
thereby killing real quality
improvement
-
7/29/2019 Sec A_Group 7
9/13
Solution 3 : Instead Of having a uniform pay plan throughout the
company, the pay plan should be division specific after consulting a
committee consisting of members from all departments at organisation
level. Employee Stock Options should be given as incentive.
PROS Each department will get to showcase
its own importance
Unequal comparisons would be
eliminated Committee would involve HR heads,
department heads and company heads
Committee would take care of
discrepancies in future as well.
Inculcating the culture of quality for
all in the pay scale.
Employee Stock option will motivate
employees to work for achieving the
organizational goals.
CONS Departmental silos would be created
Pay, criticality and performance
measurement would be subjective so
discrepancies may happen. Will give undue advantage during
appraisal to certain departments
Inter department rivalry would be
fostered instead of company specific
goals
-
7/29/2019 Sec A_Group 7
10/13
Solution 4: Have a uniform pay plan with fixed pay
along with half yearly bonuses based on
performance.
PROS
Employees are happy with
current plan and will continue
to do so
Every employee will work
hard to achieve maximum
bonus
Only bonuses will be related to
performance hence no conflictover equity theory.
Easier to implement.
CONS Will add extra cost for the
company
Not a major motivating factor
Calculation of performance is still
subjective
Do not represent quality for all
yet.
3/18/2013 Indian Institute of Management Raipur 10
-
7/29/2019 Sec A_Group 7
11/13
-
7/29/2019 Sec A_Group 7
12/13
CONCLUSION
Best Solution would be :
Instead Of having a uniform pay plan throughout the company, the pay
plan should be division specific after consulting a committee
consisting of members from all departments at organisation level.Employee Stock Options should be given as incentive.
Apart from this the company should work on motivational policies assuggested to increase the employee productivity
3/18/2013 Indian Institute of Management Raipur 12
-
7/29/2019 Sec A_Group 7
13/13
3/18/2013 Indian Institute of Management Raipur 13