Case Study: Evaluate the Work/ Life Climate in Your Company

PAY DECISIONS AT PERFORMANCE SPORTS- A CASE STUDY

Katie Perkins owns Performance Sports which is a mail-order golf equipment business. At present she has sixteen people working for the firm and all of them receive fixed pay. Perkins feels the need for a new managerial position in the firm, of a purchasing agent with an experience of six to eight years in the same business.

The challenge here for Perkins is to come up with a wage that creates a win-win position for both sides or at least adequate satisfaction for the new employee to work energetically for the company. There are some factors or elements that must be considered while setting up the wage for this new employee. Firstly since this is a managerial position than the wage should be greater as compared to the wage of the customer representatives and somewhere close to the wage of the current assistant manger of the company. Secondly Perkins intends to have some one who has a six to eight years of practice in the business so the candidate past wages must be evaluated. Other factors may be his performance, past track record and the comparison with the wages provided by competitors for the same position.

Perkins has recently found out that one of his competitors is providing its customer service representatives wages on “pay for performance” basis. On the same time two customer service representatives have showed dissatisfaction with the current pay arrangement since they think that they are paid less in contrast with the profits that they bring for the company. Introducing pay for performance system in the firm would be one of the trickiest decisions for Perkins since this system brings with its self a lot of advantages and disadvantages. Pay for performance system motivates and retains key talent hence increasing the overall productivity of the organization and creates a healthy competition amongst employees. But on the other hand it can create rifts amongst the employees, it measures the performance on just one criteria and that is profit however there are other factors that make up the overall performance of an individual, employees become too much inclined to work only for monetary objectives. More importantly, at times pay for performance act as an excuse for managers for “not managing”; they think that pay for performance is an automatic system and if someone is not performing then by cutting his pay we have done the job, however it is the duty of the company to closely monitor the performance of individuals and help them to improve.

A new payment plan for the customer service representatives can be an improved form of pay for performance system. This system will come up with a formula which will not pay employees on the basis of their profits generated for the company but for their performance as a whole. It will also set a minimum range for all individuals, going further down from that pay mark will result in termination of that employee.
References
Henderson, R. I. (1998). Compensation management: rewarding performance. ( 2nd Ed.). Reston Pub. Co.

References: Henderson, R. I. (1998). Compensation management: rewarding performance. ( 2nd Ed.). Reston Pub. Co.