Assignment 1 Case Study Individual or Team Reward Jack Hopso

Assignment #1- Case Study Individual or Team Reward

Jack Hopson has been making wood furniture for more than ten years. He recently joined Metropolitan Furniture and has some ideas for Sally Boston, the company’s CEO. Jack likes working for Sally because she is very open to employee suggestions and is serious about making the company a success. Metropolitan is currently paying Jack a competitive hourly pay rate for him to build various designs of tables and chairs. However, Jack thinks that an incentive pay plan might convince him and his co-workers to put forth more effort. At Jack’s previous employer, a competing furniture maker, Jack was paid on a piecerate pay plan. The company paid Jack a designated payment for every chair or table that he completed. Jack felt this plan provided him an incentive to work harder to build the furniture pieces. Sally likes Jack’s idea, however, Sally is concerned about how such a plan would affect the employees’ need to work together as a team. While the workers at Metropolitan build most furniture pieces individually, they often need to pitch in and work as a team. Each worker receives individual assignments, but as a delivery date approaches for a pre-ordered furniture set due to a customer, the workers must help each other complete certain pieces of the set to ensure on-time delivery. A reputation for ontime delivery differentiates Metropolitan from its competitors. Several companies that compete against Metropolitan have a reputation of late deliveries, which gives Metropolitan a competitive edge. Because their promise of on-time delivery is such a high priority, Sally is concerned that a piecerate pay plan may prevent employees from working together to complete furniture sets. Sally agrees with Jack that an incentive pay plan would help boost productivity, but she thinks that a team-based incentive pay plan may be a better approach. She has considered offering a team-based plan that provides a bonus payment when each set of furniture is completed in time for scheduled delivery. However, after hearing from Jack about the success of the piecerate pay plan at his previous employer, she is unsure of which path to take.

1. What are some advantages of offering a piecerate pay plan to the furniture builders at Metropolitan Furniture?

2. What are some advantages of offering a team-based incentive pay plan?

3. What do you think Sally should do?

Solution

Solution :

1) The advantages of offering a piecerate pay plan to the furniture builders at Metropolitan Furniture are :

2) The advantages of offering a team-based incentive pay plan is that they encourage team spirit - a sense of mutal cooperation among workers . Co-operation reduces wastage of idle time and material and better productivity is obtained . It also encouages team work where interdependence is high . The team based incentive pay provide for payment of bonus equally or proportionately to individuals within a group or team . The bonus is related to output acheived by the group in relation to define targets or to the time saved on the job . It encourages the group to monitor its own performance and discipline itself in acheiving tagets . Job satisfaction is enhanced by relating the team more closely to the operation .

3) Sally should adopt both piece rate and team based incentive pay . To reward individual performance a piece rate pay plan is required and to achieve team cooperation when workers must help each other complete certain pieces of the set to ensure on-time delivery a team based plan is also necessary .