Individual Target Completion By The Employees example essay topic

it basically is an HR case dealing with developing a compensation. HBR case. The Case of the Unpopular Pay Plans Tom Ehrenfels (HBR Jan- Feb 1992) Yog esh Yadav Roll no 451 GUDMSThe command and control style of leadership is becoming redundant and the team-based approach to work is increasingly becoming popular. It is the most essential component of success as diversity of ideas and input helps a lot in making better decisions aligning teams toward a common objective and creating the same incentive system across the entire company would help direct everyone's talent toward creating value for customers and shareholders. Teamwork plays an important role in the success of any organization. Teamwork characterizes values that encourage listening and responding constructively to others' views, providing support, and recognizing the interests and achievements of others.

These values ensure team performance, individual performance, and organizational performance. The new pay plan rolled out has all these features incorporated in it. Yet we see, not all employees are in the favor of the same. Then what should Sam Verde do before he rolls out a new plan for Top Chem?

Before rolling out the compensation / pay system for Top Chem, Sam Verde should ask himself " What does the compensation package want to convey to the employees?" Whether we realize it or not, it is says a lot. Childcare and health benefits say that you value family. Throwing a party at the end of your business's busy season lets the employees and their families know that you appreciate it when your people go the extra mile. That message is important. It is important, therefore, that he gives a lot of consideration to the compensation structure. After all, for employees, compensation is the equivalent not to how they are paid but, ultimately, to how they are valued.

He should make some minor modification to the system as follows: 80% of the former pay (base pay now) should be determined by internal equity so as to avoid turnover and absenteeism due to the implementation of the new plan, and of the 20% of the former pay (flexible pay as per the new plan) has to be divided in the ratio of 10: 10 for the performance of the team and the overall performance of the organization. Employees should be rewarded in other indirect methods like health insurance, kids education policy or a holiday for individual performance and suggestions that led to the annual increment. A gift should be given for exceptional performance. Bonuses can show an employer appreciates his / her employees and ensures that good performance or special events are rewarded.

Some indirect elements are up to the employer and can offer excellent ways to provide benefits to the employees and the employer as well. For example, a working mother may be given a few flexible hours of work for a few days / weeks etc (depends on the success and the importance of the suggestion that led to the improvement) that will allow her to be home when her children get home from school. Or by giving a recent graduate a small sum of cash to help him / her in meeting the housing expenses. Both of these individuals have different needs and, therefore, would appreciate different compensation elements. This is necessary taking in view the premise that if employees are not rewarded for their extra effort, due to the performance failure of some other employee then over a period of time, it will be a major de-motivator for the employee and as such his potential will not be tapped to the maximum limit. The target for the team can be set, specific to each department it belongs. e.g. For HR, the target would be grievances handled successfully per month while for production it could be the number of defects in the product developed.

Once these targets are set and met by the employees, they have to reward them by giving a bonus of 10% of the former pay. This will in turn motivate employees to work as a team for the extra incentive of getting monetary rewards. If this is not done and the entire 20% is tied to the team's performance, again many employees may be de-motivated if the other peers in the team do not work. In the plan suggested, employees are rewarded for individual, team as well as organizational success.

It is very important that 10% of the pay is also tied to the overall financial profits of the firm since, if the firm does not make profit, the individual target completion by the employees do not hold value. Sam Verde should use the Employee Stock Option plan so that the employee feel responsible to the job and feel a sense of belongings towards the company, that in turn leads for higher productivity. After all, very few people leave their own gates open. Last but not the least, Sam should take inputs from all the corners of the employees as after all employees should feel that it is in the benefit of them and the firm as a whole that a new plan is to be implemented or else it will face high resistance and may led to higher turnover and absenteeism rates, giving a negative image to Top Chem in the market..