A well-designed incentive pay plan can help a company achieve objectives through improved productivity, quality and customer service. In order to accomplish this, the incentive pay plan must be appropriate for a particular objective.

Quality Finnish is a growing furniture company that has recently employed a Compensation & Benefits Manager and tasked her with designing an incentive pay plan, to reward employees for their performance. At Quality Finnish, there is a need for high individual productivity and also a level of teamwork that allows the company to meet delivery dates for furniture sets that involve the effort of multiple workers. These differing needs create a challenge for management to determine the right approach, in designing an incentive pay plan.

Many organizations that experience rapid growth, set pay in response to the external market. Such a strategy can be useful in recruiting the right talent for a growing organization.

However, internal consistency in pay rates is often overlooked, leading to more long-term concerns for an organization. Such inconsistency can cause feelings of inequity among employees and lead to employee dissatisfaction and turnover. Further, if the inconsistencies fall along with a particular protected class (i.e. those who feel they are paid less in workgroups comprised mostly of females), a company could face some legal challenges.

Grace Hamilton believes a formal job analysis and job evaluation process that establishes an internally consistent pay structure, can alleviate these concerns.

1. Explain at least three (3) advantages of offering an individual piece-rate pay plan to the furniture makers.

2. Are there any advantages to offering a team-based incentive pay plan?

3. Describe the best approach the Compensation & Benefits Manager should recommend.

4. Explain the role of job analysis and job evaluation in a business.

5. What is your opinion, on Graces views on a job analysis and job evaluation