Safelite Auto Glass Case Study

Safelite Auto Glass Questions

1. What is likely to happen to the following as a result of Safelite switching from paying its installers a flat wage to basing their pay on piece rates?

* Turnover The implementation of a new pay system in an established system will naturally shake up the composition of the workforce and significantly affect turnover in the short term. The piece rate system will repel a number of longtime employees but will also entice many new employees. According to the provided material, employees had a “mixed” initial reaction to the PPP plan. Although the company’s internal communication painted a positive, opportunistic portrait of the plan, many technicians felt that their pay was being cut by 30% and that they had to “make up the difference.” Essentially, the PPP plan will have a “weeding out” effect in which the retention of technicians will be largely dependent on levels of risk aversion. Technicians who are complacent with the hourly wage system will likely leave Safelite to find employment opportunities that offer the comfort of guaranteed wages. This creates a double-edged sword. On the one hand, the plan will drive away workers who are unmotivated or unwilling to receive results-based compensation (i.e., workers who tend to be less-productive in an hourly-wage setting). On the other hand, the uncertainty will drive away effective and skilled technicians who are risk averse due to familial considerations (i.e., workers who are an asset in the hourly-wage setting). Summarily, the change will result in an uncontroverted shift in the labor pool away from unmotivated or risk averse technicians.

* Recruiting The PPP plan will create recruiting opportunities for Safelite to attract a different caliber of worker than in the past. The plan will attract ambitious individuals who “buy in” to the prospect of performance-driven compensation. However, Safelite may find it difficult to attract otherwise capable and experienced...