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Minimite Company Case Study

Essay by   •  July 15, 2012  •  Case Study  •  380 Words (2 Pages)  •  1,686 Views

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Introduction

The current situation at MiniMite Company is that the company makes large numbers of high quality electrical distribution devices for commercial applications. The company must keep costs low, develop new products and reduce the costs of existing products. The company's efforts at developing new products with larger profit margins have failed. The restructuring of the production process from an assembly line process has not been rewarding. The attempt at cross training has yielded unsatisfactory results. The managers feel that the process has script their authority away, but the still hold a large percentage of blame if a plan fails. The company's pay policy is not related to productivity and does not motivate employees to work hard or improve performance. There is a high base pay, and across the board increases are given every year.

Current Pay Structure

The Company wants improvement in productivity by redesigning the compensation system. The base pay is the pay that employees will receive at the minimum, while additional pay may or may not increase the total pay above these levels. The company hired 2 people to create a new research and development department to develop new products with larger profit margins, but no new products have been developed by them. Neither person seems very motivated to perform so the new proposal will compensate for efficient work.

Proposed Compensation System

The proposed compensation system will have only fifty percent of the present compensation as base pay. The rest will be variable pay related to the performance of the employees and team. The individuals will be rewarded based on team/group performance goals or objectives. This will reinforce team work and team identity results. This is effective for stimulating ideas and problem-solving. The disadvantage is it may be difficult to isolate impact of team. It's difficult to set equitable targets for all team. There will be a five point performance system that will have five or more criteria for evaluation.

1. Cross training

2. The Output of the Self-Directed Team

3. The Quality Standard achieved by the Team

4. Individual Contribution

5. Individual Contribution to Cost Control

Different weights will be given to each criterion and more criteria may be added for the evaluation of individual employees as required by the company. The composite score for each employee will range from 1(lowest) to 5(highest).

Evaluation Score /Variable Pay

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