SECTION A : CASE (23 MARKS)

There are THREE (3) questions. Answer all questions

Wood Furniture.

Jack Hopson has been making wood furniture for more than 10 years. He recently joined Metropolitan Furniture and has some ideas for Sally Boston, the company's CEO. Jack likes working for Sally because she is very open to employee suggestions and is serious about making the company a success. Metropolitan is currently paying Jack a competitive hourly pay rate for him to build various designs of tables and chairs. However, Jack thinks that an incentive pay plan might convince him and his coworkers to put forth more effort.

At Jack's previous employer, a competing furniture maker, Jack was paid on a piece-rate pay plan. The company paid Jack a designated payment for every chair or table that he completed. Jack felt this plan provided him an incentive to work harder to build furniture pieces. Sally likes Jack's idea; however, Sally is concerned about how such a plan would affect the employees' need to work together as a team.

While the workers at Metropolitan build most furniture pieces individually, they often need to pitch in and work as a team. Each worker receives individual assignment, but as a delivery date approaches for pre-ordered furniture set due to a customer, the workers must help each other complete certain pieces of the set to ensure on time delivery. A reputation for an on time delivery differentiates Metropolitan from its competitors. Several companies that compete against Metropolitan have reputation of late deliveries, which gives Metropolitan a competitive edge. Because their promise of on time delivery is such a high priority, Sally is concerned that a piece rate pay plan may prevent employees from working together to complete furniture sets.

Sally agrees with jack that an incentive pay plan would help boost productivity, but she thinks that a team based incentive pay plan may be a better approach. She has considered offering a team based plan that provides a bonus payment when each set of furniture is completed in time for schedule delivery. However, after hearing Jack about the success of the piece rate pay at his previous employer she is unsure of which path to take.

Source: Martocchio J.J (2012) Strategic Compensation: A Human Resource Management Approach 6^th ed. Pearson.

Answer the following based on the case study above

Question 3

Records at Metropolitan Furniture showed that, the rate of accident has increase at the company, these accidents occur due to employee misbehavior at work such as not following safety procedure. Based on this information, suggest, and explain an appropriate incentive plan that can improve compliance with safety procedure. (5 Marks)

Question 1

Jack receives a competitive hourly pay rate for him to build various designs of tables and chairs for the company. Using ONE (1) point discuss whether this pay program is an effective pay program to increase Jack's productivity to build more tables and chair for the company.

SUBJECT: COMPENSATION MANAGEMENT

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