Exsell is a popular consumer goods company known for hiring the best resources and using the best technology to produce an extensive range of goods. The manufacturing units consider productivity to be the only criterion; targets are upgraded, supervised, and rewarded amply. The groups with the highest productivity in each manufacturing unit owned by Exsell are incentivized using a substantial monthly monetary reward program. Of late, there have been some rumors about the company not doing very well in the market. Many claims of defective quality, declining market share, and employee unrest have been doing the rounds. However, the CEO of Exsell recently held a conference with the organization and the media to share its expansion plans for the coming year. He ended the conference with a discussion of how the profit margin of the company had grown substantially but many employees were left in doubt. Which of the following, if true, would indicate the need for Exsell to replace gainsharing with profit sharing as a variable pay program for its employees?
A)The company used a merit-based pay plan for decades to reward the employees who deserved recognition for good performance.
B)The company has opened multiple product categories and is experiencing brand dilution.
C)Executives who receive and evaluate client feedback have found a lot of quality concerns with the products dispatched in recent times.
D)The economy is showing signs of robust growth after last year's recession and losses.
E)The consumer goods industry has traditionally had higher barriers to entry than other industries of similar size and reach.

Question

Quizplus · Accepted Answer

C)The fact that executives who receive and evaluate client feedback have found a lot of quality concerns with the products dispatched in recent times does strengthen the argument.The fact that the client feedback reflects major quality concerns indicates that since productivity is the sole criterion for evaluation of performance, employees have attained those targets but compromised on the dimension of quality, resulting in the negative feedback from clients.Moving to a profit-sharing plan would encourage employees to focus on the productivity and quality because the overall profits would determine their incentives and compromising on quality would then be harmful for them.The usage of merit-based pay would have rendered the individual employees highly motivated and competitive and that does not explain the recent drop in performance.The fact that the company is experiencing brand dilution does not indicate the need to adopt profit sharing.The fact that the economy is showing healthy signs of growth after last year's recession and losses does not strengthen the argument.The economic condition and barriers to entry are not likely to directly impact the company's decision to use profit-sharing plans as incentives.

Exsell Is a Popular Consumer Goods Company Known for Hiring