Reference no: EM132748905

Wood Fumiture. Jack Hopson has been making wood fumiture for more than 10 years. He recently joined Metropolitan Furniture and has some ideas for Sally Boston. the company's CEO. Jack likes working for Sally because she is very open to employee suggestions and is serious about making the company a success. Metropolitan is currently paying Jack a competitive hourly pay rate for him to build various designs of tables and chairs. However. Jack thinks that an incentive pay plan might convince him and his coworkers to put forth more effort. At Jack's previous employer. a competing fumiture maker. Jack was paid on a piece-rate pay plan. The company paid Jack a designated payment for every chair or table that he compieted. Jack felt this plan provided him an incentive to work harder to build fumiture pieces. Sally likes Jack's idea: however. Sally is concerned about how such a plan would affect the employees' need to work together as a team. While the workers at Metropolitan build most fumiture pieces individually. they often need to pitch in and work as a team. Each worker receives individual assignmentI but as a delivery date approaches for pre-ordered furniture set due to a customer. the workers must help each other complete certain pieces of the set to ensure on time delivery. A reputation for an on time delivery differentiates Metropolitan from its competitors. Several companies that compete against Metropolitan have reputation of late deliveries. which gives Metropolitan a competitive edge. Because their promise of on time delivery is such a high priority. Sally is concerned that a piece rate pay plan may prevent employees from working together to complete fumiture sets. Sally agrees with jack that an incentive pay plan would help boost productivity. but she thinks that a team based incentive pay plan may be a better approach. She has considered offering a team based plan that provides a bonus payment when each set of fumiture is completed in time for schedule delivery. However. after hearing Jack about the success of the piece rate pay at his previous employer she is unsure of which path to take.

Question a) Based on the above case, explain the THREE (3) possible incentives plans, Metropolitan Furniture can use to reward its employees.

Question b) Which of the incentives plan you identified in Question a above, would you recommend to Jack Hopson? Use TWO (2) factors to justify your answer.

Question c) Under what conditions will individual incentive plans work best? Explain your answer.