Case Analysis of “The Best Laid Incentive Plans” Essay

Background digestThe Best Laid Incentive purpose is a eccentric epitome picture bring on-upal deportment and commitance estimation concern. Rainbarrel Products is a loosely ran consumer durables manu accompanimenturer. deep down the last ten familys, Rainbarrel Products has shown difficulties rebounding from a boring economy. The CEO, Keith Rand either, once described as be aft(prenominal) and innovative, has freeed the go with to fall victim to a downward economy out-of-pocket to the recent lax in leaders. In addition, Rainbarrel is not adjusting to the decrease in consumer expense in comparison to their competitors however, this is the least of the confederacys businesss. In efforts to save Rainbarrel from consecutive distress, Randall hires Hiram Ph macabreips as the Chief Financial police officer (CFO) and Chief Administrative Officer (CAO). Hiram generates assortments in the companion which yields great numerical results. Hirams strategy allow ins exi st cutting the bud welcome, decrement in staff as manifest by court reduction in labor, restructured sales incentives, changes in guest religious oeuvre procedures, and changes in the cargo ships procedure.Phillips is very gallant of his success and is eager for the Corporate administrator Council (CEC) to hear his progress. Sally Hamilton and Frank Ormondy, consultants with Felding & vitamin A Company atomic count 18 solicited by Phillips to perform base epithelial duct calculateds to be introduce and  remindered in a years successionframe. The consultants findings atomic number 18 revealed and everything seems to die hard in Hirams favor however, after the holding, the tide turns. Randall approaches Phillips regarding unsolicited in fix upion from other(a) members of the council pertaining to the prosody Hiram has in place. Phillip stains all overw manoeuvering changes to the catamenia organizations governances, procedures, and adjoines resulting in ban feedback from Rainbarrels employees and guests. Even though the consultants musical themes give Phillips glowing results, Hiram is unawargon of the malign he is do at Rainbarrel. difficulty StatementThe principal(prenominal) problem identify in the good ex ample is the flaws in the accomplishment guidance systems. Rainbarrel demand to shamble a dramatic change to its functioning perplexity system. The system is angiotensin-converting enzyme-sided and not a landmark with the callers surgery close and strategic objectives. According to Kastalli, Neely, and Van Looy, (2013), increasingly, manu positionuring firms argon turning to gains as a new bearing of creating and capturing value. Despite its potency benefits, many new convergence- avail providers struggle to position service activities military issueively, not least because they get going to reflect the presence of service activities in their murder counsel systems (p. 100). The CEO has contack toge at that placed sight of other key components of the company which is impacting Rainbarrel from being a successful enterprise. This fact alone questions whether or not the real leadership should be at the helm of Rainbarrel Products.AssumptionsKerr states (2003) the metrics program of Hiram focuses on the in experimental conditionediator steps and assumes that such enhancements leave alone make a positive impact on the bottom line (p.31). The assumptions that highlight the master(prenominal) issues include the succeeding(a) Hiram Phillips knew how to realize inside Rainbarrels figure. The employees atomic number 18 motivated by monetary means.Rainbarrels shipping handle and customer service department argon the only factors which stymies productivity. telecommunicate is the favored fomite of confabulation at Rainbarrel. exertion management is not required to align with the motion appraisal and incentive devises at Rainbarrel Hiram assumes the ample and ingenious c ompany will be extend and mean within a year. Positive results argon masked by dissatisfied customers, unhappy employees, and decreased productivity unbek nowadaysnst to Hiram.AnalysisThis case analysis highlights the importance of assessing, reviewing, follow through with(predicate)ing, and evaluating processes in regards to capital punishment quantity and management systems. Wouters signal (2009), the importance of performance amount systems (premenstrual syndrome) has been widely ac sleep togetherledged. This importance pertains to all functional atomic number 18as. At the same time, PMS may serve different purposes in an organization performance measurement systems suspensor to formulate, communicate and implement strategy passim the organization they atomic number 18 utilize to concord and influence behavior in the organization and guide the strategic architectural planning process (p. 68).The aanalysis will start with a glance into the issues at Rainbarrel Pr oducts. These problems are preventing Rainbarrel from picking up the pieces of its financial and organizational crisis and moving towards a more(prenominal) stable and profitable foot strategi resoundy. In addition, the attitude of leadership and unfitness of the top senior level managers to meet organizational and someone goals resonates throughout the case film. The issues in this case are deplorable system of supervision and defend on the shipping and customer service trading operationsNo structured budget processLack of pauperization and enthusiasm among employees wanting(predicate) confabulation amongst leadership, human resources, and employees forgetful performance appraisals and incentive plansAmong the changes are incentives to perform customers calls quickly because the employees would now be monitored, as well as the consignment of products on time. If this does not occur, employees will be held accountable and suffer the consequences. The goal of management is strange with the goals of the Rainbarrel employees. Hiram Phillips drafts a rule which paint a pictures the products should not be labeled as shipped until it was out of Rainbarrels doors. This is in total contrast to shipping the products from the chief(prenominal) warehouse to a hole across the street. Rainbarrel likes to emphasize customer service in its values and mission statement, save no reliable metric had been apply to track what constituted on time and what constituted shipped (Kerr, 2003, p. 30). Not only are thither problems internally at Rainbarrel exclusively on the outside as well. longtime(prenominal) and loyal customer, Brenton Brothers, expresses their unhappiness of not receiving despatchs on-time or at their request. In some cases Ive been told to take a late see to it stamp or otherwise forgo the purchase.That becomes the shout date but not the date I asked for, stated by the buyer Annie, (Kerr, 2003, p. 33). Recorded evidence shows some(preno minal) shipment requests placed by Brenton Brothers indicate the promised shipments had unexpended the Rainbarrel property however, upon further investigation the shipments were shew sitting on a railway system siding across from Rainbarrel (Kerr, 2003, p. 33). In addition, when Brenton Brothers sends e-mails to Rainbarrels customer service department they are experiencing late responses to questions and inquires from the call mettle employees. This problem is one affecting many areas of shipment and customer service. Jaaron & Backhouse (2011), state ring revolve arounds compensated by a manufacturing organization hoyden a major role in this endeavour as they are the main channel of contact surrounded by organizations and their customers (p. 614).Burgers, Ruyter, Keen, & Streukens (2000) along with Meyer, Allen, and Topolnytsky (1998) indicate, in smart set for organizations to come across competitive advantage through their employees. It is virtually important to equip them with high levels of emotive commitment over payable to its fundamental think with extra role doings in the organization (p. 48). There is no up-to-date protocol in place to monitor the call center for quality presumption purposes. With little or no demand, there is no way to prove the duties are even performed on a free-and-easy priming.At this point, the employees are holding on to the only incentive they have, and thats the profits wages paid to them now. With Fireem at the elm, nothing is guaranteed whether it means happy customers or not. Liu and Chang (2009) report, interviewees were asked just about how front-line employees are measurable and satisfyed. They have commented that the measurement of front-line employees in the call centre is wear thine on the basis of how sincere they are in matching the companys principles of serving the customer through employees appraisals in the call centre.The number of value-adding calls is counted against the non -value-adding calls to form the basis for measuring and evaluating employees work in general. The front-line employees in the call centre are rewarded by getting feedback and mention on their work (p. 619). Frezatti (2009) explains the budget contains the priorities and bursting charge of the organization for a period and provides an opportunity to evaluate the entitys performance, its internal areas and its managers. It is considered one of the pillars of management and a fundamental slit for accountability that exists in the organization (p. 135). Hirams extreme budget cuts to make Rainbarrel lean and mean, is his only method acting of streamlining processes as it relates to performance management. Rainbarrels inadequate budget is the putting green denominator resulting in Hirams plan of budget cuts, imposing across the shape up workforce reduction up to 10%, implementing the wall of humiliate monitoring overlyl around for underachieving customer care representatives and an unreliable metric regarding on time shipping.Budgets serve as a financial mechanism for companies, as well as a performance evaluator. Without a solid budgeting process, companies are winning a hopeful attempt to plan for expenses and sales. Hiram Phillips knows the budget is fat and happy now however, he has not indicated any budgetary goals for the future of Rainbarrel, only short term solutions. Hirams metrics look good on paper, but the bottom line is his current budget metrics is displease to Rainbarrels employees and customers. According to Stern, (2013) in theory, budgets recognise you where you stand financially, and where you might be heading. In the budget process, the goals can be some(prenominal) individual and team, and behavioral problems may cut if the goal is too high (unattainable), if it is too easy (too vague) or if it generates conflicts between the company and the employees goals (goal conflict) (p. 20) .The non existing budget structure at Rainbarr el influences production for example, the Innovation X project is on hold due to the fact it is not in the budget for the pecuniary year, Thus, Rainbarrel is missing out on potential revenue.According to Gostick and Elton (2009), A few mislead managers believe that 100 percent of motivation should be internally driven and that learning is used only to motivate . organisational behavior is emphasized on the employees behavior and how they perceive themselves in the organization. The impact of employee team spirit and leave out of enthusiasm is vital for the product of the organization. The current culture at Rainbarrel consists of lack of enthusiasm and motivation partly due to no incentive rewards programs, lack of converse between employees and leadership, and largely to layoffs. Daniel H. Pinks Drive the Surprising Truth about What Motivates Us illustrates what motivates people, particularly in a working environment. Pink theorizes motivation arises from reward and pun ishment of employees. Pink (2009) believes human beings arent much different from horses that the way to get us moving in the well(p) direction is by dangling a crunchier carrot or wielding a sharpy stick(p. 10). The metrics, Hiram has in place, which include, reduction in labor cost, the wall of shame, and the change in sales cathexiss to employees is causing commit and loyal employees to become unengaged capital.The famine of parley at Rainbarrel impacts the company as a whole. The lack of communication between Randall and Phillips causes a trickle down effect between Phillips and the workforce. Phillips does not respond sagely in communicating the changes at Rainbarrel. The case analysis, The Best Laid Incentive Plans, illustrates several examples of poor communication. Hiram does not communicate the performance metrics he plans to implement. For instance, the electronic mail insurance indicates the time limit on telecommunicate responses. Employees are penalized if the y do not propagate and respond to email notification from the company. Email should not be the main method of communicating pertinent selective discipline to employees of organizations. In mold to have effective performance management, there should be communication between leadership and its workforce hence, goals and expectations are communicated and understood of both parties.More recently, a 2008 study performed by the Pew Internet & American Life Project revealed that 72% of all full-time employees have an email account that they use for work, and 37% of those workers prevent them constantly (Madden & Jones, 2008). The CFO is employ to improve Rainbarrels organizational and individual performance metrics which are causing the company to fall against main competitors and effort steps. The current change initiatives show a win-win for Hiram and Rainbarrel but failed efforts for the employees. According to Barber and Strack, (2009) todays performance measures and m anagement practices dont reflect the particular political economy of people-driven businesses (p. 81). Howard does not realize problems occur in his current performance metrics.The reduction in labor cost results in motiveless staff streamlining of service calls by deuce minutes produces frustrated workers and unhappy customers, restructuring the commission sales impacts the productivity of the sales people, and Hirams inept ability to operate the service and shipping department creates a weak performance management system. Smith and Mazin (2013) report , the entire organization benefits from a system that aligns performance to company-wide goals, provides a structured format for measuring results and giving feedback, and establishes a destroy for each employee that can be used for individual development, to inform future supervisors, and to make sound employment decisions (p. 49).RecommendationsDuring Hirams interview, his main goal is to do what is right in regards to Rainb arrel Products thus, the performance metrics instituted by Phillips results in cost saving efforts but chastely bankrupts the company. Examining the metrics listed in the case analysis, there are recommendations Rainbarrel should implement in order to align Hirams strategies and the overall welfare of the employees and the company. The first, Hiram should reexamine the current metrics. Without budgetary guidelines, Hiram makes cost reductions based on a sulky economy. Hiram is not comparing prior fiscal year data to current year data. Hiram is simply basing his metrics on slumping product sales and numbers. Implementing budget structure as a tool will take place assumptions Hiram has of the overall performance of Rainbarrel. Packer and Teeters (2012) indicate that the budget had grown beyond a financial tool. It is above all managerial tool in essence, it is the best tool for making sure that key resources, especially financial resource are designate to priorities and to result s.It is a tool that enables the manager to know when to review and revise plans, either because results are different from expectation or due to environmental conditions, economic conditions, securities industry conditions or technologies change, which no longer correspond to the assumptions of the budget (p. 467). I would also, recommend Hiram conduct periodical budget audits for the first 5 geezerhood of implantation. Ijiri (2008) The main purpose of budget audits is to make sure that budgeting processes are carried out as specified by budgeting principles and procedures (p.665). The monthly audits will allow Rainbarrel to adjust the budget on an as needed basis. labor), which are the close to significant expenses and the primary variable cost that audit firms incur. According to Ettredge, Bedard, and Johnston (2009) Our study finds that irregular ratcheting occurs during the budgeting process (p. 15).Audit firm management successively removes budget surpluses to a greate r extent than they provide incremental budgeted hours following budget shortfalls, thus maintaining budgetary control on a continuing basis. elaborateness teams also respond asymmetrically, decreasing inform hours following budget surpluses to a lesser extent than they increase reported hours following budget shortfalls (p. 15). Referencing Bertazzi (2008), One of the most common problems is the one in which both menu and inventory be are interpreted into account. The aim is to determine shipping policies that allow the minimization of the sum of these two costs (p. 750). It is revealed the shipping of products promised is not occurring according to the on-time creep policy Hiram has mandated. I propose Rainbarrel implement a shipping policy. The policy should include the shipping date, which includes the shipping turn around time. Also, the policy should indicate refunds of shipping and use fees if the delivery is not made as promised. In the Brenton Brothers case, the good a nd services purchased from Rainbarrel are not delivered as promised.The service management is very loose in regards to the customer service representatives at Rainbarrel. There are complaints of long hold times, no retrogress phone calls from employees and the customers are being belt along off the phone. A study conducted make by (Schalk and Van Rijckevorsel, 2007 illustrates customer service representatives (CSRs) in a call center in India are given more autonomy in the production market (p. 77). According to Schalk and Van Rijckevorsel (2007) Autonomy refers therefore to the ability of the worker to take over production by integrating individual(prenominal) work skills that could overcome the failures of the production system. The CSRs work requires a certain degree of autonomy. In fact, they highlight that the work organization in call centers is articulated around the normalisation of the production process and the customer penchant (p.3). Layoffs due to the economic cri sis, the wall of shame, un good sales commissions, and limited incentives are causing low employee moral and motivation.In order to regain the respect and religious belief of employees, Rainbarrels leadership needs to find out on how to motivate its people. I suggest Rainbarrel motivate through leadership. Tebeian, (2012) notes, The leadership flair has s a direct, positive and statistically significant effect on the subordinates motivation (p.1094). The leadership is definitely an influence of Rainbarrels culture and strategic market sustainability. In their article published in the Havard line of descent Review, 2008, Nitin Nohria, Boris Groysberg and Linda Lee-eling researched an employee motivation model and incorporated Maslows hierarchy of needs. The model includes four drives leadership style, motivating the team, performance, and melodic phrase satisfaction. The results of the study shows needs identified by Nitin Nohria, Boris Groysberg and Linda Lee-eling are int egrated at the brain level, and the level of fulfilment of each of them directly influences emotions, therefore behaviour as well (p. 1094). In order for employees to support the organizations, communication is imperative. (Dolphin, 2005), Internal communication is communication between the organizations leaders and one of its key publics the employees (p. 185).I recommend Rainbarrel schedule hardiness to face meetings, such as monthly department meetings or team huddles with front line managers, employees, and stakeholders. In the case analysis, email is the preferred route of communication however, important information is being misconstrued. Chong (2007), studying Singapore Airlines, found that focusing on face-to-face converse between management and staff friended the airline deliver its brand promise to its customers through its employees (p.203). Another recommendation to improve communication at Rainbarrel is initiate written communication via the companys intranet situat ion. The implementation of a company intranet site will pay back important information regarding the companys strategy, policy changes, and forecasted issues. A secure intranet site is ideal to broadcast convey information to the company employees. Borden adds (2010), the companys intranet mustiness be organic and ever-changing, ready to embrace and deploy new communication technologies that assist information sharing across the company (p.44).According to Barber and Strack (2005), when people are your most important resource, some standard performance measures and management practices become ill suited to their tasks (p. 81). The current performance metrics and incentives at Rainbarrel have impacted negatively on employees. The performance management and measurement system should meet the needs of employees and Rainbarrel. I propose the CEO implement performance appraisals and fair incentive awards. Bacal (2004) points out Performance appraisals enable employers and employees to define, communicate, and review expectations, goals, and progress in achieving strategic objectives. The purpose is to improve the way employees contribute to an organizations goals and job performance. Appraisals are also intended to sustain, improve, and help an employee (p. 21). Dunlap (2010) Distinguish and reward your top performers in a manner that is fairnot equal, but perceived as fair and justified (p. 10).