Reference no: EM132939781
"ABC Inc. is a mid-sized manufacturing firm. It designs, builds, and installs customized, high-priced doors for customers' homes. It has a reputation for high-quality of its products and excellent service to its clients. It has enjoyed excellent financial results over the past few years.
The employees are in three units: administration, sales, and operations. Those in administration include traditional roles in HR, finance, IT, etc., that support operations and sales. Employees in operations design and install the doors; they are skilled employees and take great care in ensuring high quality. The sales employees are responsible for roles such as promoting the product, securing customers, and executing sales.
The design and price for the doors are negotiated directly with the customers.
The firm wants to become more performance-driven and would like to use its pay systems to further drive its reputation, as well as team work among its employees (executives are not to be covered as they have separate pay systems). There is no performance pay system in place for its employees. All employees are currently paid salaries.
1. Why would you use group piece rates and gain sharing plan for the operations team? Describe the key aspects of the recommended performance pay plans (group piece rates and gain sharing plan).
2. Describe three potential advantages and three potential disadvantages of each of the pay plan you recommend.