Alliston Instruments 2
Alliston Instruments-Case Study
Executive Summary
In 2011 two Asian firms entered the Canadian market in 2011. An Asian competitor made a major sales push by slashing prices in late 2011, cutting dramatically into Alliston’s sales in 2012. This move caused Alliston to lay-off 50 employees their largest layoff in company history. Alliston introduces new products to its line to counter the Asian firm but employees had no interest in working on the new products and preferred the old products to work on. Alliston in late 2012 in an effort to increase efficiency persuaded the union to accept an incentive program in exchange for job security. An individual performance pay plan was implemented with no detailed records to set standards. Standards were based on the estimates of supervisors based on a failed year; this shows that the compensation strategies and practices directly affected the company’s production quality. Supervisors can’t receive the incentive bonus and are making less money than their subordinates causing more pressure on them. Customers are complaining about product price and quality, Alliston’s sales revenue continues to fall. Due to high wastage of raw materials and supplies, labour costs are up and costs per unit are at an all-time high. The other concern is the quality of the products as defective units reach an all-time high.
Recommendation
The base salary of the employees should have been based on external market data. The incentive program should have been focused on aligning the reward system to the company goals. The employees should be measured on overall performance on different tasks with minimal performance targets. This will help motivate employees and will not compromise with the quality of the products. Supervisors and managers should receive compensation with a long term equity incentives (stock), offered after 2 years employment. The compensation mix strategy should have been used.
External Environment:
The environment was stable and
Executive Summary
In 2011 two Asian firms entered the Canadian market in 2011. An Asian competitor made a major sales push by slashing prices in late 2011, cutting dramatically into Alliston’s sales in 2012. This move caused Alliston to lay-off 50 employees their largest layoff in company history. Alliston introduces new products to its line to counter the Asian firm but employees had no interest in working on the new products and preferred the old products to work on. Alliston in late 2012 in an effort to increase efficiency persuaded the union to accept an incentive program in exchange for job security. An individual performance pay plan was implemented with no detailed records to set standards. Standards were based on the estimates of supervisors based on a failed year; this shows that the compensation strategies and practices directly affected the company’s production quality. Supervisors can’t receive the incentive bonus and are making less money than their subordinates causing more pressure on them. Customers are complaining about product price and quality, Alliston’s sales revenue continues to fall. Due to high wastage of raw materials and supplies, labour costs are up and costs per unit are at an all-time high. The other concern is the quality of the products as defective units reach an all-time high.
Recommendation
The base salary of the employees should have been based on external market data. The incentive program should have been focused on aligning the reward system to the company goals. The employees should be measured on overall performance on different tasks with minimal performance targets. This will help motivate employees and will not compromise with the quality of the products. Supervisors and managers should receive compensation with a long term equity incentives (stock), offered after 2 years employment. The compensation mix strategy should have been used.
External Environment:
The environment was stable and