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 11.1.Sussex executives have decided to change the firm's pay-for-performance plan to one that is plantwide.Which of the following characteristics of Sussex,if true,best supports this decision?
A) Sussex is a midsize firm in a stable product market.
B) Sussex is a large, global firm in a cyclical product market.
C) Most employee contributions at Sussex can be clearly isolated.
D) Sussex managers want to encourage innovation within work groups.

Question

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 11.1.Sussex executives have decided to change the firm's pay-for-performance plan to one that is plantwide.Which of the following characteristics of Sussex,if true,best supports this decision?
A) Sussex is a midsize firm in a stable product market.
B) Sussex is a large, global firm in a cyclical product market.
C) Most employee contributions at Sussex can be clearly isolated.
D) Sussex managers want to encourage innovation within work groups.

Quizplus · Accepted Answer

A plantwide pay-for-performance plan is more likely to be effective in a stable environment where the entire workforce can be aligned towards common goals, as is the case with a midsize firm in a stable product market.