Innovative Compensation
Innovative Compensation Plans Motivate Employees of Three Small Firms This case study illustrates how three small companies tie their respective incentive plans into the employees performance and the companies performance overall. The three companies are Rogan, a plastic knob business in Northbrook, IL, Aspect Communications in San Jose, CA a manufacturer of communications equipment, and Calvert Group in Bethesda, Maryland a financial-management company. All three have similar plans, but also different in many respects. Rogan ties their incentives to employee ideas that save the company money. This gives the employee's added responsibilities and added money when the company saves from their ideas. Aspect Communication uses customer service and customer satisfaction as the basis for their incentive program. These two key points give the employees of this company long-term commitment to the customer and also the company. Calvert's incentive is centered on outstanding performers and regular company distributions. Additionally Calvert reimburses employees for walking to work recognizing the cost savings of walking over driving.1. Explain how concepts of organizational justice may be used to explain t
There would be difficulty in having a common goal using this plan when dealing with a larger company. This will occur especially when management realizes the mistake and reduces or eliminates the incentive plan totally. At Rogan the key was giving the employees the responsibility for their own work. All three require input to reach the expected output of the reward. With Aspect, how do the other employees buy into an incentive plan that only measures customer satisfaction? Other employees would not have a direct impact on the program. All three have goals that need to be met. Do you think these same incentive programs would work as effectively at larger companies? Why, or why not?Answer: These incentive plans would not be as effective at a larger company for various reasons. What basic tenets of expectancy theory are illustrated by the innovative incentive systems described here?Answer: With all three of the incentive plans, the employees have "expectancy"; they must put forth a greater effort to accomplish what is necessary for the company. All three incentive plans are based on a fair outcome versus the income from the employee. In conclusion, all three incentive plans are different, but the same. Each incentive plan is based on more input by the employees. At Calvert, the bonuses are distributed to the outstanding performers, thus more input results in more output in the shape of monetary bonuses. Explain what these three firms are doing in recognition of this fact. This became more of a salary than an incentive to perform optimally and has been suspended till further notice.
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