Case Scenario: Some companies have introduced "business literacy" programs on the assumption that pay-for-performance programs will only work if employees are aware of how a firm makes money. Most employees are totally unaware of their company's financial situation. Companies like Pepsi Co, Sears, and State Farm have used pictorial representations called "learning maps" or "business games." Learning maps chart the flow of revenues and costs and explain how the company makes money. Other similar maps describe their customers' businesses. Business games teach employees how the business works by asking them to respond to a variety of challenges facing the company; therefore, providing a better understanding of what makes the organization perform better or worse. Economic "value trees" sometimes are used as well. These trees begin with return on capital and flow through each financial and non-financial measure that affect returns. Skeptics believe these programs are a way for the company to sell employees on the notion of more work for the same or less pay and to justify layoffs as a business strategy to save on costs.

Do you think these programs can help employees see the connection between individual/team performance and organizational profitability?

Do you think the credibility of pay-for-performance plans improves or declines as a result of these programs? Explain.

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