Incentive Compensation

Richard LeMoyne Albert, II

MBA 620

August 23, 2015

In high-performance work practices I am most familiar with the incentive compensation part of it. Incentive Compensation is where an employee or employees are rewarded with compensation for saving money in one way or another. It can also be an employee being rewarded with stocks in the company for a landing a big account. Basically I look at it as a bonus.

Where I have seen the incentive compensation is at the Whirlpool Factory in Clyde, Ohio. I worked there for 5 years before moving to California. The high performance work practice that was involved was the incentive compensation. The incentive was very easy, all manufacturing employees were to do their part of keeping costs down. No damaging of any part even down to the screw that held the parts of the washing machine in place. Then every 3 months they would evaluate how we did and take that money that we save and divided amongst the 3,000+ employees.

This incentive compensation worked out good in the first 1 ½ years. Then everything went downhill. No one told us that when the lines went down, machining went down, paint went down, or we ran out of parts that this affected our bonus every three months. After that first time no one got there bonus everyone stop caring about putting a good product out. They would just come in and do the 7.5 hours or 8 hours a day and go home.

All in all it came down to employee participation. We would tell the supervisors what was wrong and they would do nothing to correct the mistake to save the company money. The supervisors just wanted to keep the lines moving so they could get their quota in for the month because they wanted to get their monthly bonuses. This was their incentive compensation program. If the supervisors reached their numbers every month they would get a monthly bonus for themselves. Since they are salary this was different from the hourly incentive compensation employees.

I think Whirlpool...