Incentives Case Williamson Olliver Williamson and Oliver Case Context

Williamson and Oliver Case Context

Williamson and Oliver is a large firm providing accounting and auditing services to a variety of clients. It has expanded its business by buying up smaller firms in desired localities. The firm engages in six different lines of business, namely, career path of employees; compensation of employees; and desired behavior from employees.

Problem Statement

This report responds to the following question:

What changes should be made to Williamson and Oliver’s compensation system in order to bring about the desired outcomes in their key result areas? More specifically, how can the following issues be addressed (a) lack of management experience on the part of the PIC’s; (b) low market share for the majority of the offices; (c) the lack of eligible managers for promotion; (d) achieving the ideal mix of short-term and long-term profitability; and (e) the rocky transition from a local firm to a local office of a national firm.

Analysis

The firm currently aims to concentrate on four key responsibility areas – Practice Management, Practice Development, Human Resources, and Client Service, by focusing on six specific factors – net income, collections, chargeable-hours growth, client service, human resources development, and one-firm commitment. This set of factors forms the basis for the firm’s evaluation of each individual office under it, regardless of the mix of services offered by that office. The mix of services offered by the company is summarized by the table below, with each service being offered to the following types of clients.

The current evaluation system is therefore lacking in this regard since it uses a single set of factors to institute control over the entire range of services, without consideration for the kind of strategy the firm needs to employ.

Recommendations

The group therefore proposes that the office evaluation system be modified to take into account the particular metrics that are salient for each...