Application Assignment

PART 1: The Best-Laid Incentive Plans

In the reading, “The Best-Laid Incentive Plans”, a detailed account is given on how a young CFO, Hiram Phillips, implemented a new plan to achieve a reduction of costs while increasing productivity at Rainbarrel Products. Tracking productivity and costs in order to plan and develop areas of improvement are important objectives in any organization that intends to be successful. In order to ensure success, a well laid plan is not enough. It is important also to ensure that you have the correct people in place to achieve the objectives set forth, and that these people are highly motivated in helping to achieve the organization’s goals. Mr. Phillips quickly realized that while he may have been responsible for a reduction of costs and an increase in productivity (as his plan determined them), he had unfortunately done so at the cost of low morale and motivation of his workforce, along with a decrease in customer satisfaction. Fostering a motivating environment for employees is a pivotal component in improving employee performance and productivity (Whetten). Not only this, but ensuring that employees have the proper tools and abilities to perform the functions required of them, is essential in increasing productivity and performance as well (Whetten). Had Hiram focused harder on increasing motivation and improving employee abilities, rather than on less significant data points, his plan might have been much more successful.

In order to shed light on the many shortcomings of Mr. Phillips incentive plan, it is important to focus on what aspects of employee motivation and abilities may have been lacking, and where improvements could have been made. First of all, Mr. Phillips plan started with identifying the bottom quartile of performers and offering them a fairly generous buyout package to cut costs and increase performance. What Mr. Phillips didn’t consider, is why these employees were under performing. Was it an...