The Case Of The Unpopular Pay Plans

3 Pages 852 Words

The Case of the Unpopular Pay Plans

Tom Ehrenfeld
(HBR Jan- Feb 1992)

Yogesh Yadav
Roll no 451
GUDMS


The command and control style of leadership is becoming redundant and the team-based approach to work is increasingly becoming popular. It is the most essential component of success as diversity of ideas and input helps a lot in making better decisions aligning teams toward a common objective and creating the same incentive system across the entire company would help direct everyone’s talent toward creating value for customers and shareholders.

Teamwork plays an important role in the success of any organization. Teamwork characterizes values that encourage listening and responding constructively to others’ views, providing support, and recognizing the interests and achievements of others. These values ensure team performance, individual performance, and organizational performance. The new pay plan rolled out has all these features incorporated in it. Yet we see, not all employees are in the favor of the same.

Then what should Sam Verde do before he rolls out a new plan for TopChem???

Before rolling out the compensation / pay system for TopChem, Sam Verde should ask himself “ What does the compensation package want to convey to the employees?” Whether we realize it or not, it is says a lot. Childcare and health benefits say that you value family. Throwing a party at the end of your business's busy season lets the employees and their families know that you appreciate it when your people go the extra mile. That message is important. It is important, therefore, that he gives a lot of consideration to the compensation structure. After all, for employees, compensation is the equivalent not to how they are paid but, ultimately, to how they are valued.

He should make some minor modification to the system as follows:

80 % of the former pay (base pay now) should be determined by internal equity so as to avoid...