Reference no: EM133137474

"A piece-rate plan is a wage payment system where an employee is paid a fixed amount for each unit produced or action completed (Cooper & Jahnke, 2021)." One advantage of offering a piece-rate pay plan to the furniture builders at Metropolitan Furniture are that it would encourage their employees to build more pieces as they know they would get more of an incentive based on what they are able to build. Another advantage is for both the company and the employees in that they company can see and evaluate the production rates by employee, which in turn is an advantage to the employee in order to set and reach goals for themselves.

"Dangle a carrot in front of a horse and he'll pull the cart faster. Set down a bag of oats and a team of horses will come running (Marshall, 2018)." There are many advantages to team-based incentive plans. The first advantage being that it would encourage staff to collaborate more and work as a team to reach organizational goals. It also allows for increased performance as ideas are coming from a collective group rather than just one individual.

Sally should merge the two pay plans. Jack's idea of piece-rate pay plans have worked with his former employer, and team-based incentive pay is also proven to work. However, when it comes to team-based incentives, not all members of the team are as willing to work as hard as others. On the other hand, when employees are paid on a piece-rate pay, the quality of the work may be reduced due to them wanting to produce as much as they can to get a higher pay. Depending on how many staff members they have, they should separate them into teams. They could still be paid on a piece-rate pay plan, but the team with the highest numbers and the highest quality of production will receive an additional incentive. That way, the employee's pay is still dependent on the work they produce, but they also need to hold their team accountable when it comes to additional incentive.

Should Sally merge the two plans, why or why not?