The best Laid Incentive Plan
The case study presents an interesting concept of organizational behavior and performance measurement systems. The CFO and Chief Administrative Officer of Rainbarrel products, Hiram Phillip was very confident about the changes he brought in Rainbarrel. He had been in the company for only a year and had done lots of infrastructural changes. Some of the changes included cost cutting in budget, headcount reductions of 10 % across all units, introducing the ‘wall of shame’ policy for customer care representatives, on time shipment policy. He felt, according to his metrics and figures, he had single handedly improved the company’s performances by leaps and bounds. And today was the day where he would present his numbers to the executives in the corporate executive council meeting. Hiram was applauded by the CEO Keith Randall in the meeting and everything looked good and positive until when certain information started coming out. It came to light for instance the, Research and Development department had developed a breakthrough product that was not being brought to market as quickly as it should have been—because of Hiram's inflexible budgeting process. An employee survey showed that workers were demoralized. The customers were unhappy and were complaining about Rainbarrel’s service. Although Hiram’s numbers looked remarkable on paper, there were lots of thing that Hiram was unaware of and was detrimental to the company as a whole. Diagnosis of the problem
The main problem in the case is the shortcomings in the performance measurement systems and the need to develop a performance measurement system that meets both organizational and individual needs. The case mentions that Rainbarrel Products has shown difficulties coming back from a slumping economy. A study of the company had shown a recent lax in management could be the reason why Rainbarrel Products have had a slower adjustment to consumer decline than their...
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