Mini-Case 8­1: Pay­for­Performance and Financial Incentives

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Mini-Case 8­1: Pay­for­Performance and Financial Incentives...

 

Mini-Case 8­1: Pay­for­Performance and Financial Incentives

Jennifer Kline is the owner of J.K. Kline, a retail store that started in the basement of her home in Rothesay, New Brunswick, in 2010 and now has more than 100 stores across Canada and the United States. During the growth phase, Jennifer had put into place the necessary structure and organizational design to accompany her growth but it was now time to ensure that the business she had developed and grown would provide financially for her family over the next several years. She recognized that the majority of her employees were going to be the primary point of contact for her customers and it was time to turn her attention to recruiting and retaining the best employees possible. She was well aware of the turnover in the retail industry and she wanted to implement an employee recognition program to reward her employees and keep them motivated to not only continue doing an excellent job but to also stay with her company.

Jennifer placed a call to her brother, Mark Kline, who had worked for a benefits consulting company for the past 15 years and asked him if he could help her design an employee recognition program. She discussed with Mark the unfortunate reality of the retail industry - employees were not well paid and if a competitor offered them as little as fifty cents per hour more, they were apt to leave because for workers at that low pay level, it was enough to convince them to quit and work elsewhere.

Jennifer paid her employees minimum wage but had a generous commission plan in place and employees seemed to be responding well to this incentive. She had, however, lost a few key store managers in the last year and in exit interviews she discovered that they felt their efforts were not recognized. For example, she found out that these particular store managers and some of their employees regularly stayed after hours without pay to ensure the store was in pristine condition when it opened the next morning. As Jennifer thought about their comments, she realized that although the employees had a higher than industry commission incentive, they were human and as such needed recognition and praise in addition to other incentives.

She asked Mark to meet with her the following week and to bring with him a report on the different types of employee recognition programs that might work for employees in a retail environment.

Jennifer was concerned that the programs Mark might suggest would be too expensive for her to implement, but he had briefly told her not to worry because non­financial rewards were also very popular and he would tell her more about them when he saw her next week.

 

1. Exit interviews at J.K. Kline indicate that store managers who had worked overtime without pay felt unappreciated. Which of the five elements of total rewards best reflects this? dissatisfaction?

 

A.performance and recognition

 

B.benefits

 

C.compensation

 

D.development and career opportunities

 

2.How does variable pay help organizations manage their total compensation? budget?

 

 

A.by tying strategy to? skills-based pay

 

B.by ensuring all performers get top pay

 

C.by providing the same bonuses to all employees

 

D. by keeping base pay inflation controlled

 

3.J.K.? Kline's overhead and administration costs rose by? 25% over a? one-year period, and Jennifer wanted to use a? company-wide incentive to offset the losses. Which of the following would be the most appropriate plan for this? situation?

 

 

A.stock ownership

 

B.capital accumulation

 

C.?profit-sharing

 

D.gainsharing

 

4.Which of the following is NOT a reason that merit pay can? backfire?

 

 

A.Merit pay can disrupt team spirit.

 

B.Merit bonus pool is tied to company performance.

 

C.Performance appraisals are viewed as unfair.

 

D. Supervisors are reluctant to give higher merit pay to higher performers because it may alienate other employers.

 

5.Mark is recommending tuition assistance and apprenticeships to increase retention. These rewards could best be described as which of the? following?

 

 

A.development and career opportunities

 

B.compensation

 

C.benefits

 

?D.work-life programs