The best Laid Incentive Plan
Case Description
The case study presents an interesting concept of organizational behavior and performance measurement systems. The CFO and Chief Administrative Officer of Rainbarrel products, Hiram Phillip was very confident about the changes he brought in Rainbarrel. He had been in the company for only a year and had done lots of infrastructural changes. Some of the changes included cost cutting in budget, headcount reductions of 10 % across all units, introducing the ‘wall of shame’ policy for customer care representatives, on time shipment policy. He felt, according to his metrics and figures, he had single handedly improved the company’s performances by leaps and bounds. And today was the day where he
As most of the complaints by employees were "No role models.", "No mentoring:", "No chance to pick the veterans' brains.", "No knowledge sharing about accounts." In fact by placing systems like “Wall of fame” resulted in humiliation. The new performance management process lacked conducive working conditions, employees had no feeling of achievement, no learning and growth opportunity, According to Herzberg’s motivator-hygiene model, these conditions lead to dissatisfaction among employees and leave them demotivated. The employees were stressed out most of the time and were focused only on achieving their targets – whether to release more patents or sell more products or attend more calls per/day thus the company was losing its competitive advantage.
The other stakeholders that are affected by Hiram’s performance management policy are the customers. Long term customers like Brenton Brothers have numerous complaints against the Rainbarrel services. They do not get their products on time and customer care doesn’t resolve their issues through phone. Their important shipments were not delivered to them on time, but were lying at the rail road near the plant. All this leaves the customers unhappy and dissatisfied which can hamper their overall business.
Course of Action
The key issue we see in the diagnosis is that the metrics used for performance management system is flawed and is highly focused on