Rwt 1
Business Research Report
Improving Productivity by Instituting a Compensation Plan
Presented to: ABC Manufacturing, Human Resource Department
Assessment Code: RWT1
Student Name:
Student ID:
Date: January 24, 2013
Mentor Name:
Table of Contents
Executive Summary 3
Introduction 5
Research Findings 5
Performance-Based 6
Profit Sharing 7
Gainsharing 8
Recommendations 10
Conclusion 10
References 12
Executive Summary
ABC Manufacturing Co., Inc. is a small company with 120 full time employees. We produce aluminum doors and windows. Although we are highly successful, we find that it can be difficult to retain our valued employees. Human resources has decided to evaluate several compensation plans and see if any options exist that can help retain employment and improve productivity. It seems that all successful compensation plans have four main qualities:
1) Goals that are clear
2) Goals that are challenging and attainable
3) Regular feedback on job performance
4) Cooperation between employees and managers
When deciding on possible options for the company to consider, these four factors were taken in to account. After investigating numerous compensation plans, I narrowed it down to three possibilities: 1) Performance-based 2) Profit sharing and 3) Gainsharing.
Performance based compensation plans are monetary rewards that are based on individual performance. The performance norms are based on general ideas of what is acceptable for each job position no matter if the goal is too high or too low for the employees in that position. Bonuses are paid out on a regular basis. Each job goal can be easily manipulated by employees by downplaying job responsibility. This plan has a tendency to encourage risk taking by employees. It can be seen as acceptable to cut corners to increase bonus size. In my opinion this is not the appropriate plan for ABC Manufacturing Co., Inc.
Profit sharing is a plan that is based on the
Improving Productivity by Instituting a Compensation Plan
Presented to: ABC Manufacturing, Human Resource Department
Assessment Code: RWT1
Student Name:
Student ID:
Date: January 24, 2013
Mentor Name:
Table of Contents
Executive Summary 3
Introduction 5
Research Findings 5
Performance-Based 6
Profit Sharing 7
Gainsharing 8
Recommendations 10
Conclusion 10
References 12
Executive Summary
ABC Manufacturing Co., Inc. is a small company with 120 full time employees. We produce aluminum doors and windows. Although we are highly successful, we find that it can be difficult to retain our valued employees. Human resources has decided to evaluate several compensation plans and see if any options exist that can help retain employment and improve productivity. It seems that all successful compensation plans have four main qualities:
1) Goals that are clear
2) Goals that are challenging and attainable
3) Regular feedback on job performance
4) Cooperation between employees and managers
When deciding on possible options for the company to consider, these four factors were taken in to account. After investigating numerous compensation plans, I narrowed it down to three possibilities: 1) Performance-based 2) Profit sharing and 3) Gainsharing.
Performance based compensation plans are monetary rewards that are based on individual performance. The performance norms are based on general ideas of what is acceptable for each job position no matter if the goal is too high or too low for the employees in that position. Bonuses are paid out on a regular basis. Each job goal can be easily manipulated by employees by downplaying job responsibility. This plan has a tendency to encourage risk taking by employees. It can be seen as acceptable to cut corners to increase bonus size. In my opinion this is not the appropriate plan for ABC Manufacturing Co., Inc.
Profit sharing is a plan that is based on the
References: Blake , R. (2006, July 24). Employee retention: What employee turnover really costs your company. WebProNews, Retrieved from http://www.webpronews.com Blencoe, G Heffernan, M. (2012, September 14). Why performance related pay doesn 't work. Moneywatch, Retrieved from http://www.cbsnews.com Imberman, W Masternak, R. (2009). Gainsharing or profit sharing: The right tool for the right organization. Retrieved from http://www.hr-guide.com/data/G44301.htm Mora, V Stack, J. (2000, November 01). The problems with profit sharing. Inc., Retrieved from http://www.inc.com/magazine/19961101/1864.html Stillwell, L. (2002, December 16). Performance-based compensation increasingly popular. The business review, Retrieved from http://www.bizjournals.com Vanden Bos, P (AAT 29050937)(p.2) [->0] - http://www.scribd.com