Introduction To find out whether or not Mr. Gonzales should implement the new compensation plan, we will initiate with a valuation of the proposed bonus plan that he is considering. This evaluation will include an analysis of the key decisions and the persons responsible for making the decision as well as a discussion of the proposed plan. Upon this analysis we will conclude whether it is a good idea to implement it and state our suggestions for a modification of the plan. Valuation of the proposed bonus plan Included in the new bonus plan are the store managers (SM), the regional managers (RM), and the corporate staff managers (CM). Not included are the CEO (Mr. Gonzalez) and the COO; their bonuses would be decided by the compensation committee of the board of directors. Furthermore all other employees not included in the plan would continue as before with a bonus in the range of 2%-5% of base salary. Each of the company’s 82 stores is operated by a SM, who has a lot of autonomy. The 82 store are organized into 9 geographical regions. The RMs are responsible for providing oversight and advice to the SMs, whom had little formal education. On the top of these two manager levels are the CMs, who are responsible for a range of centralized functions including purchasing, human resources, marketing, real estate, and investor relations. The proposed bonus plan consists of 4 million pesos plus 8 percent of the corporate income before bonuses and taxes in excess of 120 million pesos. The total bonus pool will be divided between the managers as following: SMs – 70%, RMs – 15%, and CMs – 15%. This year, the bonus pool will amount to 8,498,400 million pesos (all calculations: cf. the calculations for the Whiz Kids questions on the ... ... middle of paper ... ... 8.498.400 The bonus pool is then divided between the different groups: Store Managers : 70%*8.498.400 = 5.948.880,00 Regional Managers : 15%*8.498.400 = 1.274.760,00 Corporate Managers : 15%*8.498.400 = 1.274.760,00 To find the average amount per manager we divide the pools by the number of managers in the specific group Store Managers : 5.948.880/82 = 72.547,32 Regional Managers : 1.274.760/9 = 141.640,00 Corporate Managers : 1.274.760/5 = 254.952,00 The bonus pool for the top performing store managers: Total units in the bonus plan 6*1+9*2+11*3+20*4+15*5+8*6+4*6+3*6 = 302,00 Average pay per unit : 5.948.880/302 = 19.698,28 Store top performing managers (6 units) = 118,189,68
There is also no form of standardized training throughout the organization. Employee morale and employee relations are lower than should be expected, due to miscommunication and lack of an established strategy. There is an absence of consistency in various ways regarding branding and identity as well. No two stores appear to be alike, names vary and locations are unpredictable. Customers also complain that the menus are inconsistent. It is also evident that reliable communication is lacking. For example, GC3 has customer comment cards, but, as the case study explained, GC3 management is not sure if they are being reviewed or taken into consideration. More so, GC3 remains unclear if they are considered one company, or three separate companies. GC3’s product portfolio is becoming stagnant, and there is an apparent need to refresh the menu and align it with their competitors. Profits are falling behind, and there is nothing in place to enable GC3 to understand what products and what stores need to be evaluated. Lastly, GC3 management is becoming disgruntled. This aggravation is evident within the Pittsburgh locations. Due to this insubordinate behavior, corporate culture in the Columbus locations has started to
• Executive’s incentive bonus and pay will be transparent and aligned to the performance of the company.
The emergency rescue of the Royal Bank of Scotland in 2008 has cost the UK government thus the British taxpayer a huge amount of money. Many people are upset about the high bonuses the RBS management board have received, both because of the outrageously high amount and because the performance of the bank on the long-term was not good at all. According to the agency theory managers do not always act in the interest of the shareholder, but often act in the interest of themselves. The downfall of RBS could have been prevented if managers were not paid out a bonus based on their performance of one year, but rather a combination of a bonus based on their performance of multiple years and a bonus ...
Employees protested, “that supervisors should have received a reduced bonus because they were not working as hard as they are and the company might be playing with the numbers” (Beer & Collins, 2008 p.6). A beneficial system for the new Scanlon Plan is to rearranged payout count. This will help to regain trust amongst employees and management. Equity Theory stresses integrity to all compensation arrangement and if this is effectively executed, then this will resolve the mistrust issue that employees have with their management team. The rewards should not be paid on a consistent month-to-month basis, instead, on a settled proportion plan, which gives rewards "each nth time the right behavior is demonstrated" (Bauer and Erdogan, 2013, p. 112). Traditionally, this would imply that workers are paid reward each time a specific measure of cash in permitted payroll is met. “The current permitted payroll is at 38% of sales value” (Engstrom, 2008). This requires no change. Instead, when Engstrom comes to a permitted payroll of one million dollars, then 10% of that sum should naturally disbursed to workers as rewards. This tackles numerous past issues with the Scanlon
B) A bonus of $15,000 payable annually based upon an 8% growth rate at the end of each fiscal year.
Management should share the responsibility with employees to calculate how fast bonuses are generated and earn. This may be a sensible strategy explained by the Vroom 's Expectancy theory; which suggest that people will be motivated to accomplish an objective if they feel it benefits them and also help accomplish the objective. Thus, the employees feel a significant worth of respect, and their sense of liberty increases. The modification to the Scanlon Bonus Plan directly relates to the motivation of employees and has them embrace the social system they operate in at the organization. These adjustments of the Scanlon Bonus Plan straightforwardly identifies with the motivation of employees and how they embrace the social
The previous Scanlon Bonus Plan was unclear and could easily be manipulated; in time, it became extremely inefficient. The new compensation plan, Scanlon 1.5, will yield across the board compensation for all employees. It will be based off the monthly profit margin of the Engstrom Auto Mirror Plant. This has shown positive results from a study pertaining to employees at an executive level; this process will be more promising than the former compensation plan (Overton, 2005). The previous plan was too complex to fully comprehend; yet, it motivated employees to exceed the standard mandated of them. It is imperative to maintain some resemblance of the monthly bonuses; which Scanlon 1.5 will do. The implementation and procedure of the Scanlon 1.5 plan will be publicly displayed for all employees to view; additionally, a meeting will be held in regards to the explanation of the new compensation
The Plan was initiated to reward individuals for working hard and increasing the company goals financially as well. The plan included higher level management receiving employee suggestions for improvement and monthly bonuses based of the productivity increase. The plan seemed well planned until they failed to mention the monthly bonuses calculations. The Plan was not well clarified of what percentage of the bonus that everyone receives and what was it based off. The misunderstanding led to accusations form the employees that there money was being played with. The company lacked a clear channel of communication between the employees who were actually doing the productivity and the management who were less active in the plant. When the company decided to introduce the Scanlon Plan to the employees they could have easily addressed all the issues prior too it getting out of
Quintana can rectify this situation by modifying the Musimundo incentive system. Quintana can use multiple performance measures to reward his managers. These performance measures can be sales based on a flexible budget that looks at historical sales and measures them against current sales. The manager could be rewarded for the percentage of increase.
...lexibility and is geared towards adaptation and change. The environment is constantly changing and is very unstable so a structure that provides ease of customer service is one to adopt. With making the choice I risk once again the produce and meat managers possibly operating as a separate entity, but I have also empowered my store manager to make all decisions so it will be his responsibility to communicate and remind everyone that even though there are departmental groupings at the end of the day everyone one is a part of that C & C store. It is also his duty to enforce customer service because all they see if the final output. For instance, C & C customers are accustomed to superior quality of meat and produce and that is what their loyalty is centered around. Adopting a better structure is to generate healthier internal environment but not decrease on output.
Holland Enterprises is on a new strategic direction, to attract and retain the most talented employees and to reduce turn over. Human resource department has came up with a new compensation plan. In the propose compensation and benefits system plan , I will explain a new compensation plan for Holland Enterprises, also I will explain the components of the compensation and benefit system plan in order to attract and motivate employees to be productive . In order for the compensation and benefits system plan to be operational, the package should include a necessary level of compensations to fulfill basic needs, equity with the external labor market, equity within the organization (Henderson, 2006).
The committee must be given authority to establish remuneration packages for directors within the upper and lower limits. These ceilings and floors must be duly approved by the shareholders in AGM in advance.
2. Kinicki, Angelo, Williams, Brian Management, a practical introduction, Second Edition. New York, New York, McGraw-Hill 2006/2003
This report will give us a clear perspective as to what the optimal organizational structure that suits Rendell Company plus some additional control system in attaining the company’s main objectives. We will be also tackling the roles, functions and responsibilities of a controller in an organization. This case takes us into Rendell Company which is currently having problems between the corporate controller and the divisional controller. We assessed the advantages and disadvantages of the organization structure of Martex whether it can be applied and be implemented to Rendell Company in order to resolve the problem. Through the frameworks and issues, we concluded that while current setup would cause some budgetary discrepancies because of the lack of loyalty between the divisional controllers to the corporate controller, changing the organization structure of Martex would cause a disparity between the division manager and the divisional controller thus resulting in an anxiety in their working environment which is too costly as compared to maintaining the current setup.
Bonus and incentive pay are used by many for profit companies and are not typical components of nonprofit compensation policies. As with base salary and salary increases, decision-making criteria should be established and communicated for awarding bonuses and incentive pay. Typically this type of compensation is tied to specific performance results against pre-set goals and objectives at the individual and organizational level.