Eu Research

1.Evaluate the performance measurement and incentive systems used in Puente Hills Toyota. What changes would you recommend if any?

Performance measurement in Toyota is result driven Management By Objective. On one hand, PHT has done a good job in structuring financial measures. On the other hand, non-financial measures such as customer satisfaction surveys have pretty vague or no effect on final bonus of the employee. Given that PHT is measured by Toyota on CSI for performance evaluation and allocation of car models. This report recommends PHT to include both factors customer follow –up and internal customer satisfaction Index bonus as a part of final bonus. Having said that, it is important for PHT ownership to make employees clear on the impact of these new factors. For problems related to internal conflict between service employees and sales person on Mondays, it is recommended that PHT arrange for service employees on Sundays. PHT can rotate two service employees per Sunday to evaluate the retail costs for service for trade in vehicles for extra bonus. To check employees cutting corners in service department, given that recheck is close to zero, PHT appears to be doing a good job by controlling behavior of the employees.

2.At Puente Hills Toyota, most employees’ variable incentive pay increases linearly with performance, however performance is defined; that is the higher the performance, the larger the bonuses that are paid. In most large companies, however particularly at managerial levels, no bonuses are paid until a minimum level of performance, such as a budgeted goal, is exceeded. What are the advantages and disadvantages of using a reward/performance function like Puente Hill Toyota’s?

The advantages of using this linear system include attracting best talent and motivating employees to perform as per the best of their capabilities from the start and not to depend on others in order to hit the target. Budgeted goal method, on other hand, requires...