FOC 101-Caselet # 1: ABC Computers

  • 28 Sep 2010 01:39
    Message # 425589
    Jun (Administrator)
    QUESTIONS FOR DISCUSSION:

    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.

  • 28 Sep 2010 22:04
    Reply # 428679 on 425589
    Jason Comer
    1. What happened at ABC Computers that led to such a disappointing turn of events (e.g., high employee turn over, disengaged employees, etc.)?

    It sounds like the company took a very top-down approach and did not take any of the employees' feedback (or Tanaka-san's feedback) into account. As well as this, they were not responsive with their own feedback and left the employees hoping and waiting for an extended period of time with no reply or discussion about the points that had been raised. 

    The case study also mentions that after the employees raised the issue with Tanaka-san initially, although he told them that it would be difficult to change the comp structure, they left the meeting in a 'state of hope' - perhaps Tanaka-san could have done more to manage their expectations at this stage as well.


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

    The case study sounds similar to my organization in a number of ways. The management have been telling employees that they are considering changing the comp structure for a couple of years now, but it has still not been delivered. Although my company does not have the same internal inequality issues as ABC Computers, it still highlights the point that prompt feedback and constant communication with employees is vital to prevent over promising and under delivering.


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

    Tanaka san should be using exit interviews with employees who leave the company to gain evidence that the compensation scheme is their reason for leaving the company. This could help emphasize the importance and urgency of a better scheme to the top management of the company. 

    If I were in his situation, I would suggest that the company implement a performance based payment system which rewards and motivates sales people on their profitability (not just revenue) in order to balance the needs of the company with the desires of the sales force. This could be a split system with a fixed base salary, plus incentive bonuses based on sales targets and profitability. It sounds like a fairly traditional Japanese company, so implementing something like a fully commission based compensation scheme may not match with the corporate culture.
  • 01 Oct 2010 19:00
    Reply # 436497 on 425589
    Junko Makino

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

     

    The company didn’t seem to make any effort in measuring if their employees are happy, such as opinion survey.  They have just sat on the comfortable result and never looked back which consists of.  They should have reviewed and analyzed what their successful result had been made of.  This would also help them to plan future business and investments.

    As Jason mentioned, Tanaka-san also should have taken more proactive role for this issue –such as case analysis of exits, liaising with Western Division Sales Manager.  If those managers could have resolved the issue which hold Western Division Sales number, the business result would have been even better.

     

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

    In my organization, the compensation system is not the main reason for leaving the company. 

    Rather, staffs are disappointed with their managers in various reasons; the lack of management skills is the one of them.  This ‘management’ means not only ‘managing the people’ but ‘managing the issue’; in other words, finding the solution and delivering in appropriate manner. 

    It always is said that employees join the firm and leave the managers.

     

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

     

    I agree with Jason about using ‘exit interview analysis’ in order to persuade ABC Company Managements.

    I would also conduct employees’ opinion survey; what their employees are satisfied with, what they are not, what they would improve, what they could cut out.

    Regarding the compensation system, I would suggest first that bonus pool itself should reflect the each Dept. performance.

    Secondly it might work the combined approach of performance base and qualitative (behavioral) base in incentive. 

    Sales Dept usually consists of revenue creators (A) and Ops & Admin who supports Sales team (B). 

    The bonus for group A will consist of 70% performance base and 30% qualitative base.  The bonus for group B will consist of that percentage vice versa. 

    This is because any sales dept. has the assistant or operation staffs who usually are not revenue creator.  In addition, sales people should be required ‘good employees’ even if s/he earns many.

  • 01 Oct 2010 20:49
    Reply # 436514 on 425589
    Miho Tachimori

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

    The management team downplayed the opinion or complaints about the current compensation system from Eastern Division and didn't take any action to it.

    From the employee's standpoint, neglecting them is considered the same that the company is sending the message that they don't value the employees opinion, moreover, their contribution to the company. The employees who received this message will give up on working that company and try to look for another job which evaluates their diligent work appropriately.


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

    As Junko-san said, the company should know the exact reason of that high turnover rate and recognize the damage coming from that events. Employee Survey is one of the very direct tool to know what employees satisfied with and unsatisfied with.

    And after recognizing the problem, sincere attitude and prompt action is the vital when we confront this kind of problem. Even we channot change the compensation systems quite quickly, we need to keep communicating and updating the status with integrity.

     

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

    I would recommend Tanaka-san to investigate some schemes of  the incentive programs (percentage of the incentive vs total annual pay, frequency of the payment, adequacy of the process of target setting, measurement, fundings etc) and select what kind of schemes are best match with his business strategy.

     

  • 03 Oct 2010 08:58
    Reply # 437284 on 425589

    QUESTIONS FOR DISCUSSION:

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

    The case study suggested that the Management stuck to the current compensation system which was the standard pay system based on the number of days the employees worked, despite the fact that Tanaka-san suggested to change to a performance-based variable pay system. It was this standard pay system based on the number of days the employees worked that the employees, specifically the Eastern Division, felt that they were not compensated accordingly. The hopeful employees did not see any actions taken by the Management or receive any information/update regarding their feedback after three months and this was the start of the events that happened.

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

    A good and effective compensation system is vital to the success of the company and it also tells what the company's goals are. If the company rely on sales figure to be successful, the sales department will be most important group that sustains the life of the company. Compensating them and retaining the best would be essential otherwise the Management will have to face a sales team that has high turnover and this will effect the performance of the company. ABC Computers's main issue is having a good compensation system. My current organization (educational service industry) will have a slightly different issue in terms of compensation compared to ABC Computers, but one placement agency firm I worked for before had a similar issue.

    The Managing Director wanted to change the entire compensation system that was in practice since the Kuala Lumpur branch was established to a compensation system that was practised in all Japan branches. To him, the Japan compensation system was a successful compensation system and a fair one too that promote sharing of candidate/job seekers database among the consultants. He believed that the compensation system in Kuala Lumpur branch was not one that encourage candidate/job seeker database sharing, encourage selfishness within the team and a factor why consultants turnover rate high. Slightly different from ABC Computers's case, when it was suggested to the team, the managers were against the idea and refused to cooperate with proper feedback.

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

    I would recommend the management of ABC Computers to look into the possibility of revising the current compensation system (standard pay system based on number of days worked) to a performance-based variable pay system. Not onlythat, I would request for a commitment from them to review the findings that I get from researching as to the pros and cons between the two compensation systems, together with feedback from the sales team. I would also recommend that ABC Computers to address the issue seriously and to provide proper feedback to the sales team, to show that the Management do care about them and their welfare.

  • 03 Oct 2010 09:23
    Reply # 437294 on 428679
    Jason Comer wrote: 1. What happened at ABC Computers that led to such a disappointing turn of events (e.g., high employee turn over, disengaged employees, etc.)

    The case study also mentions that after the employees raised the issue with Tanaka-san initially, although he told them that it would be difficult to change the comp structure, they left the meeting in a 'state of hope' - perhaps Tanaka-san could have done more to manage their expectations at this stage as well.


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

    The case study sounds similar to my organization in a number of ways. The management have been telling employees that they are considering changing the comp structure for a couple of years now, but it has still not been delivered. Although my company does not have the same internal inequality issues as ABC Computers, it still highlights the point that prompt feedback and constant communication with employees is vital to prevent over promising and under delivering.


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

    Tanaka san should be using exit interviews with employees who leave the company to gain evidence that the compensation scheme is their reason for leaving the company. This could help emphasize the importance and urgency of a better scheme to the top management of the company. 

    If I were in his situation, I would suggest that the company implement a performance based payment system which rewards and motivates sales people on their profitability (not just revenue) in order to balance the needs of the company with the desires of the sales force. This could be a split system with a fixed base salary, plus incentive bonuses based on sales targets and profitability. It sounds like a fairly traditional Japanese company, so implementing something like a fully commission based compensation scheme may not match with the corporate culture.

    Hi Jason,

    I would like to add in my thoughts.

    1. The caselet didnt really say much about how much effort Tanaka-san put in when speaking to the Management. If there were more information, we may perhaps know how much effort was put into and perhaps we may know for sure that its the Management who were the stubborn ones. Or perhaps it was Tanaka-san who did not speak to the management at all?

    2. Since I know the nature of business for your company, it will be a difficult task to find the 'right' compensation system. Depending on the goals of the company and the compensation system that supports it, it will attract the people who feel comfortable and happy with it and if the company decide to hire people who does not fit well into that, it will disrupt things.

    3. I am into the use of exit interviews. However, I believe there are companies simply call the last meeting with the leaving employee 'exit interview'. Example, in my current organization, an exit interview was just for the following: deciding the last working date; administration (keys, etc.); explanation on social insurance (health insurance, shitsugyo-hoken); salary (explanation on taxes).

    My idea of an exit interview would be more than just what I had described above, and 50% of the session should be finding out why the person(s) is(are) leaving. Such information tells us a lot. One company I used to work for, did not even have a proper exit interview and instead, I was emailed a document titled Exit Interview! I found it very pathetic considering the company was a well-known name.

    Waimun


     

  • 03 Oct 2010 18:30
    Reply # 437390 on 425589
    Jun (Administrator)
    Dear All,

    Thanks for your comments and very insightful insights into the learning of this case study. This is the kind of interaction and engagement I would like all of you to practice. Let's discuss some of the highlights of your discussions during our next class for additional learning.

    See you all Monday.

    Regards,

    Jun
  • 03 Oct 2010 19:17
    Reply # 437393 on 425589
    Akiko Agarita
    Jun wrote:QUESTIONS FOR DISCUSSION:

    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.


    1. They failed to solve the employees's dissatisfaction about the current compensation system.

    2. I think the standard pay system based on the number of days employees worked fits only for the people in cost center such as administration and performance based compensation is better for the peple in profit center. 

    3. If I am in Tanaka-san's shoes, I would suggest reward the sales performance by paying one time bonus rather than increasing their monthly salary because it is much easier to reflect their performance.

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