FOC101-Fall2011: ABC Computers' Compensation Problems

  • 27 Sep 2011 13:13
    Message # 709295
    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.

    DUE DATE: 02 October 2011
  • 29 Sep 2011 23:24
    Reply # 711633 on 709295

    QUESTIONS FOR DISCUSSION Reply:

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

    The company failed to recognize their employee’s efforts and hard work when the staff would meet their specific sales targets. When some like Tanaka-san, who is well respected and liked by his fellow co-workers, isn't able to work with upper management to get some sort of incentive for meeting their sales targets, the employees lost faith in the company. From this point on, motivation started to go down and led his co-workers to search for new jobs and go somewhere they felt they would be appreciated and rewarded for their efforts.

     

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

    From my own personal experience with my previous job, I experienced the same thing when it came to compensation. I went from being a very motivated, eager to learn and to take on new tasks, to an employee who was just "there".

    It all started when it came time for my annual performance review. Although I scored well, I was told I wouldn't be getting a raise this year due to budget constraints. This destroyed my motivation and left me wondering if I really was appreciated by the organization and if I was working real hard for nothing. So it made me wondering, “Why should I work so hard if I am not going to be rewarded for it?” I still had faith that maybe I would get raise next time and hoped for the best.

    When the time came up for my 2nd performance review the next year, I was able to secure a raise but only a very small one, only $100 extra per month, which covered most of my train pass for the month. From that point on, I started to plan my exit from the company and just waited for the right time to leave. I had no motivation to work hard and go the extra mile knowing no matter how hard I worked, I probably wasn't going to be rewarded and if I was, it wouldn't be much.  

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

    I would recommend that management create some sort of incentive bonus for meeting the sales targets. This incentive bonus could either be paid monthly or paid out at the end of each quarter to reward them for their hard work. If they meet their target they get X% for a bonus, if they smash their target they get up to X%.

     I might also suggest they offer some sort of monthly incentive such as a a paid day-off with a nice dinner at some restaurant for two or tickets to events (i.e. concerts, sporting events, amusement parks and so forth) to the top performer each month to keep the team motivated month to month. Although it is small, it will keep them motivated throughout the year and remind them that they are being rewarded for their hard work.  

  • 02 Oct 2011 15:08
    Reply # 713358 on 709295

    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 employees of Eastern Division of ABC Computers were de-motivated to continue doing their best to achieve their target.  Comparing with employees of Western Division, their performance was double but the compensation was the same. They thought that they were not treated appropriately and evaluated properly.

     

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

    I thought that we should make action very soon if it is needed. It is people that make performance.  Once they resigned, it takes time to develop another team before achieving target of same level. 

     

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

     

    I should recommend to the management to introduce new performance system which reflects result of performance, to reward high performer, instead of seniority based salary system.  If it takes time, I should make contact with the management repeatedly and patiently, until they make action.  At the same time, he should keep communicating with his subordinates, let them keep informed about movement of the management as much as possible, and encouraging them.

  • 02 Oct 2011 19:36
    Reply # 713405 on 709295
    Miki

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

    Their strategy for sales growth was inperpect. They paid attention only to what they want to acheive, but not to how they can acheive their targets. Demotivated people do not their best. Without their hard working and losing good performers, the East Division will not be able to keep the high achivements in sales. Also The standard pay system based on the number of days the employee worked gave the employees in the Western Division a wrong message that no matter how hard they work or what they achieve, the Management do not care and they receive the same salary.

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

    I agree with the fact that performance-baced compensation package is effective to keep employees motivated. However a company also has a responsibility to guarantee employee's life. I belive combination of uniform and performance-based compensation is the best.


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

    I would recomment to the management that they should implement `performance-based bonus plan`.
    In Japan, a company is not allowed to reduce employees' base salary without their agreement.
    However in the event that the compnay is not paying bonus to its employees, they would have a problem to find a capital for bonus, because the additional lobour costs may loose their competitiveness.


  • 02 Oct 2011 19:43
    Reply # 713406 on 711633
    Miki
    I agree with his idea of monthly incentive, which can be implemented soon without a big finantional impact. 

    It takes a time to remake compensation plan and implement it, but the ABC Computers has alreday started loosing their sales reps. The Management should take some action to show that they listen to voice of their employees.

    Curtis wrote:

    QUESTIONS FOR DISCUSSION Reply:

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

    The company failed to recognize their employee’s efforts and hard work when the staff would meet their specific sales targets. When some like Tanaka-san, who is well respected and liked by his fellow co-workers, isn't able to work with upper management to get some sort of incentive for meeting their sales targets, the employees lost faith in the company. From this point on, motivation started to go down and led his co-workers to search for new jobs and go somewhere they felt they would be appreciated and rewarded for their efforts.

     

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

    From my own personal experience with my previous job, I experienced the same thing when it came to compensation. I went from being a very motivated, eager to learn and to take on new tasks, to an employee who was just "there".

    It all started when it came time for my annual performance review. Although I scored well, I was told I wouldn't be getting a raise this year due to budget constraints. This destroyed my motivation and left me wondering if I really was appreciated by the organization and if I was working real hard for nothing. So it made me wondering, “Why should I work so hard if I am not going to be rewarded for it?” I still had faith that maybe I would get raise next time and hoped for the best.

    When the time came up for my 2nd performance review the next year, I was able to secure a raise but only a very small one, only $100 extra per month, which covered most of my train pass for the month. From that point on, I started to plan my exit from the company and just waited for the right time to leave. I had no motivation to work hard and go the extra mile knowing no matter how hard I worked, I probably wasn't going to be rewarded and if I was, it wouldn't be much.  

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

    I would recommend that management create some sort of incentive bonus for meeting the sales targets. This incentive bonus could either be paid monthly or paid out at the end of each quarter to reward them for their hard work. If they meet their target they get X% for a bonus, if they smash their target they get up to X%.

     I might also suggest they offer some sort of monthly incentive such as a a paid day-off with a nice dinner at some restaurant for two or tickets to events (i.e. concerts, sporting events, amusement parks and so forth) to the top performer each month to keep the team motivated month to month. Although it is small, it will keep them motivated throughout the year and remind them that they are being rewarded for their hard work.  


  • 03 Oct 2011 17:52
    Reply # 713934 on 709295
    Sherry

    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 current compensation system at ABC Computers did not reward the efforts of the employees equitably. This subsequently led to the demotivation of the employees of the Eastern Division who were receiving the same compensation despite achieving way higher sales targets than the Western Division. Secondly, Tanaka-san failed to convince the management to adopt what he deems as a more fair compensation system, a performance-based performance. Also, despite trying to convince his team that he suggested to Management and they were looking into the issue, there were no follow-ups on the matter. This caused the employees to lose confidence in the management and possibly also Tanaka-san for his lack of leadership skills.


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

    This case study proved that a robust performance appraisal and compensation system is necessary in every organization. While compensation is just one of the many factors that affect employee motivation, without a good reward/recognition system, employees will not be motivated to perform better. This is especially so in Japan, where I have observed that compensation system and promotions are highly tied to age and seniority in the company.


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

    I would recommend the company to consider a performance-based compensation package for sales employees, and also try to get approval for additional budget to motivate employees who achieve their targets through incentives and perks.

    One of my previous companies had a separate compensation package from the rest of the company specially for sales employees. Those who achieved their targets received a monetary bonus, on top of basic salary. And the sales division also had a budget to reward employees who achieved their targets every quarterly through dinner cruises, team building cooking events, etc.

Share this page:


i






 
  


 
 
---Media Partners---
WSJ Asia Logo.jpg
 
   
 

 

      


 
© 2007-2015. The Japan HR Society (JHRS). All Rights Reserved.  c/o HR Central K.K. (The JHRS Secretariat), 3-29-2-712, Kamikodanaka, Nakahara-ku, Kawasaki-shi, Kanagawa-ken 211-0053 JAPAN | Tel: +81(0)50-3394-0198 | Fax: +81(0)3-6745-9292 | Email Us. | Read our Privacy Policy.
Powered by Wild Apricot Membership Software