Skip to main content

Total Rewards Bases for Pay (Traditional, Incentive, and Person-Focused Pay)

Read the case study and provide a recommendation to assist Human Resources Director Sheila Gaines in deciding whether a gain sharing plan is the best option for CircleWorks.

Case Study: Gain Sharing at CircleWorks

When deciding whether a gain sharing plan is the best option for CircleWorks Human Resources, Director Sheila Gaines needs to consider the implications of a gain sharing plan and her own goals. Gain sharing is a group of incentive systems that provide participating employees with an incentive payment based on improved company performance, increased productivity, increased customer satisfaction, lower costs, and/or for better safety records (Martocchio, 2014). Human Resources Director Sheila Gaines’s has the goal of utilizing a gain sharing plan to promote more cooperation overall within the company and to provide incentives for the employees to make improvements to the production process (Supplemental Case Chapter 5: Gain Sharing at CircleWorks, n.d.).

Considering Human Resources Director Sheila Gaines’s goals I would recommend that she proceed with a gain sharing plan for CircleWorks. However I would advise her to use a Scanlon plan because of the emphasis it places on employee involvement. This plan would be the most beneficial to Human Resources Director Sheila Gaines as it allows employees to exercise self-direction, self-control, and responsibility within the company (Martocchio, 2014). A Scanlon plan would place an emphasis on teamwork in order to reduce the costs, it would involve a suggestions system that would send cost-saving ideas from employees through a labor management committee that would evaluate and implement suggestions, and a monetary reward for productivity improvements to encourage employee involvement.

My final recommendation would be for Human Resources Director Sheila Gaines to recommend a Scanlon gain sharing plan to the company President of CircleWorks. A Scanlon gain sharing plan could be adapted based on any suggestions or criticism from the President. A Scanlon gain sharing plan would allow Human Resources Director Sheila Gaines to direct incentives at all employees as opposed to the individual teams to promote more cooperation within the company; it would also allow her to provide incentives for the employees to make improvements to the production process (Supplemental Case Chapter 5: Gain Sharing at CircleWorks, n.d.).

References

Supplemental Case Chapter 5: Gain Sharing at CircleWorks [PDF]. (n.d.).

Martocchio, J. (2014). Strategic compensation: A human resource management approach (8th ed.). Upper Saddle River, NJ: Prentice Hall.

A company of 15 employees has recently decided to overhaul its performance appraisal system. Based on the assigned reading, which plan would be most appropriate for the company to adopt? Why?

Scroll to Continue

A performance appraisal system is used to indicate an employee’s level of performance or achievement; they are commonly used due to their ability to provide quantitative assessments, their ease of administrations, and their ability to assist in differentiating between employees (SHRM, 2014). The goal of a performance appraisal is to test the performance of employees and rate employees on their level of performance. If a company of only 15 employees decided to overhaul its performance appraisal system, then the company would first want to do a job analysis on all of jobs done by the employees. Job analysis is the process of obtaining information about all of the parameters of a job, such as the responsibilities, behaviors, skills, the physical requirements, and the mental requirements of the people who do it; this information is collected through determination of the duties, tasks, and/or activities that people who hold that job complete (Bohlander, Snell, & Morris, 2013). A job analysis is typically used in order to create a job description which is a clearly defined description of the job which includes a list of either required or preferred qualifications for the job incumbent; before choosing a performance appraisal system it is important that the company understands the qualifications for the job. Once the company understand the qualifications of the jobs that will be appraised they can begin to incorporate those qualifications into a performance appraisal system (Martocchio, 2014).

Without knowing the specific jobs, qualifications, and type of company I can only choose an appropriate performance appraisal system based on the size of the company. Performance appraisal systems can be classified into three main systems known as: trait, behavioral and results-based performance appraisal systems. A trait based performance appraisal system is somewhat biased as it evaluates the extent to which an employee possesses certain characteristics like dependability, reactivity, initiative, leadership, or other characteristics considered to be important for the job or the organization (Bohlander, Snell, & Morris, 2013). A trait based performance appraisal system would be the most applicable system in situations where certain characteristics are required for a job; for instance, if an organization was looking to promote an employee to manager rank, then it would be important that the employee was dependable, able to take the initiative, and that they possess strong leadership skills. A behavioral based performance appraisal system provides action-oriented information on employees; this method is typically used to evaluate behaviors that should or should not be demonstrated by employees while on the job. A behavioral based performance appraisal system would be most applicable in situations where employees need to be judged based on their actions; for instance, if an organization is looking for a new head of security they would want to evaluate the behavior of their security personnel to determine which ones make the right and wrong decisions. A results-based performance appraisal system evaluates an employee’s accomplishments using sales figures and/or productivity output. A results-based performance appraisal system would be the most applicable if an organization was looking to promote a person to a senior sales management position; in this scenario the organization might want the employee with the highest number of sales or greatest performance output. Without knowing the goals of the company with the overhaul of its performance appraisal system I would recommend a behavioral system because the behavioral system involves a rater or supervisor judging the extent in which employees display successful job performance behaviors. The fact that the company only has 15 employees means that it would be feasible for one supervisor to evaluate the employees. This system would also allow the supervisor to work with the employees to improve their behavior or productivity in areas where they are lacking (Martocchio, 2014).

References

Bohlander, G., Snell, S., & Morris, S. (2015). Managing human resources (17th ed.).

Thomson/South-Western.

Martocchio, J. (2014). Strategic compensation: A human resource management approach (8th ed.). Upper Saddle River, NJ: Prentice Hall.

Performing Job Analysis. (2013). Retrieved December 9, 2015, from http://shrm.com

SHRM. (2014, October 21). Performance Management: Which performance rating scale is best, and what should an employer consider in adopting a performance rating scale? Retrieved 2016, from http://www.shrm.org/templatestools/hrqa/pages/whattodowhendevelopingperfratescales.aspx

Related Articles