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*******Response to the following 2 discussion response below, regarding case study BELOW******
BD1.W
hat are some advantages of offering a piece-rate pay plan to the furniture builders at Metropolitan Furniture?
One of the main advantages is that promoting a piece-rate pay plan could boost productivity (Martocchio, 2020). This is because employees will be aware that the more furniture they build, the more they will be compensated, leading to a supposed boost in productivity (Martocchio, 2020). It can also foster greater feelings of ownership for employees, giving them a greater awareness of the financials that go into the operation (Martocchio, 2020). Overall, employees feel the urgency to finish furniture pieces faster. This could be positive for many reasons and help keep delivery times low.
What are some advantages of offering a team-based incentive pay plan?
It seems that often, the employees at Metropolitan already work together as a team to keep their competitive edge (Martocchio, 2020). Because of that, it doesn’t seem too far of a stretch to introduce team-based incentives. Promoting a team structure also helps ensure that the quality of each item produced is good (Martocchio, 2020). Sometimes, with individual incentives, there can be issues where quality is favored too highly above quality. Promoting team-based incentives would help ensure that furniture is completed promptly while also ensuring quality.
What do you think Sally should do?
Sally could stand to do maybe a mix of incentives. But I think she should also focus heavily on team incentives. According to one study, incentivized teams increased their performance by 45%, and individuals who were incentivized increased by 27% (Marshall, 2013). There is more room for growth with team incentives. Sally may also want to avoid quality issues arising from individual incentivization. Still, I’m sure that providing individual incentives such as performance bonuses each quarter, or whenever makes the most sense, would also be beneficial.
References
Marshall, A. (2019, August 9).
Making team incentives work. Welcome to SHRM.
Martocchio, J. J. (2020).
Strategic compensation: A human resource management approach(10th Ed.). Boston Pearson Education.
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ZB2
. What are the benefits of offering an installment plan for furniture makers at Metropolitan Furniture?
Personal productivity will increase. A performance pay plan rewards employees directly based on the amount of work they complete. This motivates experienced workers like Jack to work harder and faster and achieve individual results. Costs can be controlled. (Martocchio, 2020) Because pay is tied to output rather than hourly work, Metropolitan can better control labor costs, especially if some workers are more efficient than others. The company pays for the work done rather than the time spent on the job. Skilled workers like Jack prefer this type of system because it allows them to earn more than a regular hourly wage. If payment is based on completed and approved parts, workers are incentivized to maintain a certain level of quality, because poor quality work will result in fewer approved parts and ultimately less income.
4-7. What are the benefits of offering a team-based incentive pay plan?
Teamwork incentives encourage collaboration, which is so important at Metropolitan, (Martocchio, 2020) especially when deadlines are tight, and workers need to help each other make furniture sets. The plan incentivizes employee interests based on collective success, so it aligns with the company’s on-time delivery goals. Metropolitan’s competitive advantage is on-time delivery, so team-based plans encourage employees to support each other in achieving this goal. Employees will focus on meeting deadlines and reduce the likelihood of delays. This prevents individuals from focusing solely on their own productivity at the expense of the larger team. The staff is enthusiastic about helping others with their tasks and ensures that all parts of the furniture package are completed on time. Team incentives often build camaraderie and a sense of shared purpose, improve overall morale, and create a more positive work environment.
4-8.
What do you think Sally should do?
Sally should consider implementing a hybrid incentive pay system that combines individual and team-based incentives. Individual pay plans encourage employees like Jack to increase their individual productivity, while team-based incentives ensure employees can work together when needed. To maintain Capital’s competitive advantage in on-time delivery, a team-based incentive system will allow employees to focus on supporting each other as deadlines approach.
In summary, the hybrid approach allows Sally to leverage the benefits of both systems and increase productivity without sacrificing the teamwork required for on-time delivery.
References:
Martocchio, J. J. (2020).
Strategic compensation: A human resource management approach(10th Ed.). Boston Pearson Education.
Chron.com. (2021b, March 9).
The advantages of offering a team-based Incentive Pay Plan. Small Business – Chron.com.
***Analyze the Case Study ”
Individual or Team Reward ”
CASE 1 : 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 coworkers to put forth more effort.
At Jack’s previous employer, a competing furniture maker, Jack was paid on a piece-rate 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 preordered 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 on-time delivery differentiates Metropolitan from its competitors. Several companies that compete against Metropolitan have a reputation for 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 piece-rate 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 piece-rate pay plan at his previous employer, she is unsure of which path to take.
