Assignment: Industrial Electronics, Inc.
Simpply the best First Page and the Assignment Questions:
My division had another great year last year. We all worked hard, and the results were there. But again we got no reward for our hard work. It's very frustrating. —Division Manager, General Products Division, Industrial Electronics, Inc.
Industrial Electronics, Inc. (IE) produced a wide range of electronic equipment, including signal sources, test equipment, communications systems, and various piece parts and subassemblies such as motors, generators, and probes. Total annual sales were in excess of $8 billion. IE's stock was listed on the New York Stock Exchange.
The company's objective was to maximize shareholder value. In most of its business areas, IE had to be innovative to stay ahead of the competition. However, price competition was also significant, so the company also had to maintain tight control over costs.
The company was organized by product line. Its 16 relatively autonomous divisions were managed as profit centers. The division managers reported to one of four Business Group managers who, in turn, reported to the company's CEO.
Thirty managers, including all line managers at the level of division manager and above plus key corporate staff managers, were eligible for an annual management bonus award. (Many lower-level employees were included in a separate “management-by-objectives” incentive plan.) The management bonuses were based on company-wide performance. Each year, a bonus pool equal to 10 percent of the corporation's profit after taxes in excess of 12 percent of the company's book net worth was set aside for assignment as bonuses to managers. This amount was divided by the total salary of all the executives eligible for a bonus. This yielded an “award per dollar of salary.” The maximum bonus paid was 150 percent of salary.
Historically IE's managers had been earning bonuses that ranged from of 30-120 percent of salary, with the average approximately 50 percent. But
My division had another great year last year. We all worked hard, and the results were there. But again we got no reward for our hard work. It's very frustrating. —Division Manager, General Products Division, Industrial Electronics, Inc.
Industrial Electronics, Inc. (IE) produced a wide range of electronic equipment, including signal sources, test equipment, communications systems, and various piece parts and subassemblies such as motors, generators, and probes. Total annual sales were in excess of $8 billion. IE's stock was listed on the New York Stock Exchange.
The company's objective was to maximize shareholder value. In most of its business areas, IE had to be innovative to stay ahead of the competition. However, price competition was also significant, so the company also had to maintain tight control over costs.
The company was organized by product line. Its 16 relatively autonomous divisions were managed as profit centers. The division managers reported to one of four Business Group managers who, in turn, reported to the company's CEO.
Thirty managers, including all line managers at the level of division manager and above plus key corporate staff managers, were eligible for an annual management bonus award. (Many lower-level employees were included in a separate “management-by-objectives” incentive plan.) The management bonuses were based on company-wide performance. Each year, a bonus pool equal to 10 percent of the corporation's profit after taxes in excess of 12 percent of the company's book net worth was set aside for assignment as bonuses to managers. This amount was divided by the total salary of all the executives eligible for a bonus. This yielded an “award per dollar of salary.” The maximum bonus paid was 150 percent of salary.
Historically IE's managers had been earning bonuses that ranged from of 30-120 percent of salary, with the average approximately 50 percent. But