Additional Case 11.2
Richland Manufacturing uses an individual-based pay-for-performance plan for
employees.
Manager input in the form of performance evaluations primarily determines individual
employee rewards. Performance appraisals at Richland are used for multiple purposes
including compensation, training, and work planning. Since implementing the plan,
many managers have noticed that employees tend to play it safe by setting modest
rather than challenging goals for themselves. Employees have also been avoiding
important tasks, such as satisfying the needs of customers and keeping work areas neat.
In addition, most employees express disbelief that pay and performance are actually
linked. As a result, Richland is considering making modifications to the system.
The HR Director wants a system that will reward all employees based on the entire
company’s performance because he wants to increase employee commitment. The VP
of Operations wants to reward specific productivity and quality improvements with a
simply structured system that considers labor costs as well as other production
expenses. The VP of Operations also believes that labor and management should work
together to allocate the rewards.
Refer to Additional Case 11.2. Which of the following would most likely improve the
success of Richland’s current incentive plan?
A) Limiting the use of performance appraisals to compensation purposes
B) Offering team-based pay in addition to individual bonuses
C) Providing Scanlon plans to all employees
D) Encouraging employee competition