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The Best-Laid Incentive Plans

GROUP 6 :

MATHEW SUJEET JOSE (28)

VINNAKOTA HARISH (52)

VIKASH KUMAR PANDEY (51)

VIKAS (50)

ANSHUL (F01)

ROHAN KUMAR (36)

2AGENDA

Summary

SAP Analysis

Issues

Alternatives

S-W analysis

Recommendations

3Summary Hiram Phillips is CFO and chief administrative officer of Rainbarrel

Products, a diversified consumer-durables manufacturer

According to Hiram, Rainbarrel company had the potential for greatness but not able to reach its limit due to lack of discipline across company.

 Phillips designed new plan for performance management and incentive.

The corporate executive council was going to meet to discuss the changes that Hiram designed and implemented last year.

In Meeting Few issues arises :- More focus given on budget than Innovation

- Workers were demoralized due to which their performance were `getting affected.

- Layoff was based on headcount.

- Complaints from sales department regarding mentoring, knowledge sharing.

- Issue regarding delay of orders

Should Rainbarrel revisit its approach to performance management?

Indian Institute of Management Raipur

4Situation-Actors-ProcessSituation

Actors

Process

R&D dept.-Number of commercially unviable patents, Innovation X project

Sales Dept.-Unhappy over layoffs , No knowledge sharing, Unsatisfied customer-Loopholes in system

•Hiram Phillips-CFO and chief administrative officer •Keith Randall -CEO of Rainbarrel, inspiring leader ,focused on innovation. and Marketing Visionary•Sally and Frank -External consultants

• CEO has given a full power to CFO for implementation of a better performance management system.

• No involvement of the employees concerned.• No analysis of industry structure concerned and no feedback system.

Indian Institute of Management Raipur

5ISSUES

Major Issue : Performance management system implemented by Rainbarrel

Products was one track and didn’t involved all the parties concerned.

Lack of provisions to handle resistance to CHANGE.

Lack of timely monitoring and feedback of new performance management system.

Minor Underlying issues : Lack of coordination between various leadership roles.

Focus on intermediary steps without defining the criteria for success.(long term vs. short term)

Stringent policies for cost reduction but no concern for employee satisfaction and motivation.

Indian Institute of Management Raipur

6Alternatives for the company

1. Revisit the approach towards performance management and change it for the long-term sustainability of the company.

2. Maintain the status quo.

Indian Institute of Management Raipur

71. Revisit the Performance Management System

Short term

Address the warehouse issue which has a ripple effect on the returns and customer complaints

Resort to positive methods of feedback rather than punishment of negative behaviour like 'Wall of Shame'

Reorient the system to include only those metrics meaningful to the business at a holistic level.

Long term

Analyse, involve, communicate and take feedback from all the levels of the organization.

CEO & all functional heads should be more proactive and involved

Indian Institute of Management Raipur

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Strengths : Sustainable returns because of increase in customer

satisfaction

More productive and happy employees

A change management system fostering sustainability in the long term

Decisions of the management inline with the strategic objective

Will improve employee confidence and loyalty towards the system thus increasing the motivation to work.

Weaknesses : Employees may view management as indecisive

Indian Institute of Management Raipur

1. Revisit the Performance Management System

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Strengths : Implementation of any new system will inevitably be

painful for all the stakeholders. However, after sometime the system settles down and the change is accepted.

Weaknesses : Long term sustainablity of company is at stake as the

system is based on incorrect assumptions.

Unhappy and unproductive employees

No attempt to create a change management system that can be used in various other situations.

Indian Institute of Management Raipur

2. Maintain Status-quo

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Recommendation

Selected alternative : Revisit the Performance Management System

Resort to positive methods of feedback

Include only those metrics meaningful to the business

Analyse, involve, communicate and take feedback from all the levels of the organization.

CEO all functional heads should be more proactive and involved

Indian Institute of Management Raipur

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