Reference no: EM133658700

Case Individual or Team Reward? Jacob Kardish has been making wood furniture for more than 10 years. He recently joined Metropolitan Furniture and has some ideas for Emily Goodfellow, the company's CEO. Jacob likes working for Emily because she is very open to employee suggestions and is serious about making the company a success. Metropolitan is currently paying Jacob a competitive hourly pay rate for him to build various designs of tables and chairs. However, Jacob thinks that an incentive pay plan might convince him and his coworkers to put forth more effort. At Jacob's previous employer, a competing furniture maker, Jacob was paid on a piece-rate pay plan. The company paid Jacob a designated payment for every chair or table that he completed. Jacob felt this plan provided him an incentive to work harder to build the furniture pieces. Emily likes Jacob's idea; however, Emily 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 assignments, but as a delivery date approaches for a preordered 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 on-time delivery differentiates Metropolitan from its competitors. Several companies that compete against Metropolitan have a reputation of late deliveries, which gives Metropolitan a competitive edge. Because their promise of on-time delivery is such a high priority, Emily is concerned that a piece-rate pay plan may prevent employees from working together to complete furniture sets. Emily agrees with Jacob 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 scheduled delivery. However, after hearing from Jacob about the success of the piece-rate pay plan at his previous employer, she is unsure of which path to take.

Questions

1. What are some advantages of offering a piece-rate pay plan to the furniture builders at Metropolitan Furniture?

2. What are some advantages of offering a team-based incentive pay plan?

3. What do you think Emily should do?