HRM

THE BEST LAID INCENTIVE PLAN

 Hiram Philips, CFO and Chief Administrator Officer, reported statistics which
demonstrated positive results of the performance management system
which was implemented one year ago.
There was an abrupt slowdown in consumer spending and Rain barrel was
adjusting less rapidly than its competitors.
Keith Randall, CEO focused on innovation. He was a Marketing Visionary,
however the company had no budget integrity under his leadership.
The company was fat and happy.

The company had the potential for greatness but lacked the discipline.

MEASURES TAKEN BY HIRAM

Reduction in Labour Cost
Removing the bottom quartile using buyout packages
Reduction of 10% on all the units (Jack Welschs Philosophy)

Improved Productivity
Productivity improved by 50%
Worst performers names were put on Wall of Shame.

Increase in On-time Shipments

Improved customer service.
Shipment gone up by 92%

MEASURES TAKEN BY HIRAM

Better customer service

Customer service metric

Number of calls handled by each service rep per day increased by 50%
Time spent per call reduced from 6 minutes to 4 minutes.

One single measure established on time delivery

On time meaning when the product left the company property

Commission on sales to employees

Commission to be given only on the actual sale price.

Commission to be calculated based on number of sales per quarter.

Importance of straight forward rules and rewards in driving superior performance.

CONCERNS
People were finding loopholes in the rules.
Mindlessly counting patents.
Company employees being not treated well by the sales representatives.
Layoff policy had its own loopholes and was criticized.
No mentoring and no guiding work culture. The only focus became sales.
Area-wise differentiation was not taken into consideration. Hence, focus
towards main locations in order to increase sales.
Customers unsatisfied with the delivery service because of the loopholes in
the rules.
Customer call center service was not upto the mark, since there was a
target of 4 minutes for the call.

CASE COMMENTARY
Hiram should not have taken such extreme measures.
He should have introduced performance metrics by consulting different heads in
company.
He should have listened to the employees what they feel about these policies.
He should have run a pilot programme in a department before running through out
the organization.
He should have set high goals and communicated them to the employees. If there is
a problem in the process, he should have worked on removing the obstacles.
He should have had feedback loops in place to understand the actual problems
faced by the people.
Wall of Shame should be replaced with Wall of fame.
He should define objective criteria for measuring performance and also test whether
it captures the true performance that ultimately adds value to the organization.