FOC101-Summer2014 | Questions for Caselet on ABC Computers

  • 20 May 2014 15:15
    Message # 1554957
    Jun (Administrator)

    1. What happened at ABC Computers that led to such a disappointing turn of events (e.g., high employee turn over, disengaged employees, etc.)?

    2. What can you learn from this case study that you can apply to your own organization?

    3. If you are in Tanaka-san's shoes, what would you recommend to the management of ABC Computers?

    Note: Feel free to critique, comment, or ask questions on your classmates' answers.

    DUE DATE: 23 May 2014
  • 21 May 2014 01:58
    Reply # 1555144 on 1554957

    1.    Communications break down!

    Management, manager and employees, all parties are not accountable for comp. Employees in Eastern Division clearly express “Uniform compensation system” don’t fairly reward them, as they cannot see the alignment between their biz strategies and compensation system.

    Management seems just installing this comp system without explaining why they believe it is good for their biz and employees. (I’m not sure if they design this comp system based on their belief or any concept. )

    Tanaka-san said to his members his inability to change the comp system. It is not good manner as a manager. Even if the comp system is not good, once it is installed, manager should ask management why their vision/mission drives this comp system, explain to employees, and try to fully use it.

    Employees left company or were demotivated as they felt not only comp system is unfair but also their manager is powerless to improve the situation..

    2.When we design comp system, we should review what is our biz and strategy. How we want employees to work, increase motivation. We should have enough communication when we install new system and every time we pay bonus.  

    3.I would recommend managements first to review our business and organization again.

    If they sales of both Eastern / Western teams are highly volatile and management wants two teams to work together helping each other, uniform comp system may have meaning.

    Then, management to have clear communication to employees, and create open and safe environment employees can feel free to ask about their biz/comp.

  • 21 May 2014 04:56
    Reply # 1555275 on 1554957
    1. Answer:

    * Discontent.
    * High number of abandonment.
    * Lack of motivation.

    2. Answer:

    * Everyone is equally needed. And also that lack of incentives lead to low performance of the employee, as the discontent which can cause stress, negativity, bad environment, and in some cases dishonesty.

    3. Answer:

    * Elaborate a "memo", and take it to the Directors, highlighting their qualities, commitment, and effectiveness, bring to table their needs and priorities, within the company.
    * Underline their dissatisfaction that led to abandonment.
    * Submit new proposals for improvements and benefits to be implemented in the organization, such as: 
                        - Salary increase.
                        - Health insurance.
                        - Annual bonus evaluation. 
  • 22 May 2014 22:35
    Reply # 1556004 on 1554957

    Answer for questions:

    1.  Lack of communication.  If Tanaka san updated each situation to them and shared what is going on and how he took actions for the issue, they could keep the team. Turnover rate is mirror of a sense of distrust.

    2.  Compensation must not set by individual action like this case.  Company needs vital evidence to change compensation plan first.  In other hand, anyone cannot guarantee to increase situation without any warrant and budget.

    3.  Start from learning current compensation system, then if we need to propose change, should set the goal and plan for enhancing the issue, e.g. reason for change, cost, time, how to approach and who is involved.  Keep good relationship, enough communication with team.  

    Last modified: 22 May 2014 22:52 | Yoshida
  • 25 May 2014 01:40
    Reply # 1556801 on 1554957

    Hi all,

    I wonder if managers should share with employees all progresses of policy changes or conversation with management? 

    Transparent or too much open?


  • 26 May 2014 10:11
    Reply # 1557031 on 1554957

    Hello, I would like to comment here for the question from Kazuko san.

    I don’t think it is good idea to share any unsure information for avoidance of confusion. And I do not mean “all” information for sharing with employee. The decision progress is not a responsibility of all employees. Especially the change contains negative side, should prepare to next or next to next approach in depends on their reaction.  But when company made a decision to change structure that has direct repercussions on employees, it might be better to announce clear information early.

    Regarding our case study; ABC Computer, I assume that he intended to work for increasing their compensation as performance basis.

    As Kazuko san mentioned, Tanaka san should not talk a sudden impulse. Once he said it for motivating team, the team member expects to know the situation.  Tanaka san was a one of a leader who was respected; his mood had a negative influence to the team member.   By his communication lack, a relationship of mutual trust had damaged.  I think these are part of the reasons for increasing their attrition rate.

    I would like to learn from your opinion or actual case at class.   Thank you.

  • 26 May 2014 15:55
    Reply # 1557079 on 1554957
    Classmates - great answers. Sorry for my delayed response, I had technical issues.  Our IT department blocks a lot of email.  
    1.  The compensation program did not match the business environment. When the manager brought it yo the attention of upper management, they did not listen. He made the situation worse by telling his team he would try to get it fixed and was not able to do that in a timely manner. 

    2.  Compensation programs should be periodically reviewed to match the current business situation. If they do not match, it is very de motivating for the employees. Companies and Hr  need to be able to effectively communicate the program as well.  

    3.  I would recommend that they do a comprehensive compensation review and include the employees in the review to ensure that their compensation package matched their business goals and strategies. 
  • 28 May 2014 00:41
    Reply # 1557669 on 1554957

    Thank you, Kabigting-sensei,

    They are very interesting and informative readings.

    Is Seniority base pay bad?

    I’m not a supporter of seniority base pay, however I sometimes feel seniority base pay gets blame more than they should.

    I believe there were eras when seniority base pay worked effectively to motivate employees. Besides, I believe still it is valid for some industries or business models, like craftsman, engineers. Years of experiences differentiate their performance.

    I heard seniority base pay in Western context doesn't have performance appraisal as mainly being applied to blue collars, while Japanese companies do performance appraisal under seniority base pay.

    Yes, employees remember how they felt and forget the bonus / salary increase amount one year later…

    When business result is not so good, we can only make smaller bonus pool. Manager pay larger portion to the talents, absolute amount may be small, still far better than other coworkers. HR asks managers to have rich communication with employees. Money without message does not motivate employees.

    I have asked some employees if they are satisfied if they get JPY1mil monthly salary?  Yes!

    How about all employees get JPY1mil monthly salary? No, we would like to be fairly compensated.

    When employees are complaining about salary, I found there are two causes, absolute salary amount or performance appraisal. Besides, more often PA is the root cause.

  • 15 Jun 2014 20:11
    Reply # 3006422 on 1554957

    Apologies for my late submission.

    1. The newly introduced compensation system was not aligned with business strategy. It was not performance linked either.

    2. The compensation system needs to be aligned with business strategy. Compensation is powerful message from the company to their employees which could lead employees' de-motivation and their resignation.

    3. I would advise the managements to check the market standard and the practice taken by the competitors so that the managements understand the basic principle i.e. " compensation need to be align with the business strategy". Also I would advise them to implement impact analysis in case introducing new comp system.

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