Assignment:
You are a Management Consultant at ABT, a worldwide firm that specializes in developing compensation systems. You are to advise the Compensation Manager of Lite Safe, a UK and US multinational, on the appropriate payment system for its auto glass installers whose job is to replace broken auto glass for cars and trucks. Currently the company thinks that the installers are too slow and are discourteous to customers. The workers currently are paid on time rates. You are expected to base your answer on theories regarding the choice of payment systems.
Relate theories:
1.Efficiency wage theory
Efficiency wages= pay above market rates Why?
- Attract better than average workers (Weiss 1980)
- Retain (i.e. increase cost to employee of job loss)
- Turnover model: Avoid poaching by competitors (especially when high investment in firm specific skills) (Salop 1979)
- Shirking model: Provide incentive to increase effort since effort cannot be determined a priory or effort is not perfectly observed, ‘buy the cooperation of workers' (Shapiro and Stiglitz 1984)
- Reduce supervision costs that arise from the need to monitor employees (responsible autonomy/ internalised discipline) (Friedman 1984)
- Akerlof's (1982) gift exchange models but also sociological notions of reciprocity (fair wages model)
• Henry Ford introduced a 5$ a day min wage in 1914, doubling pay of most employees.
• Ford (1922): "... no charity involved ... We wanted to pay these wages so that the business would be on a lasting foundation ... A low wage business is always insecure ... The payment of 5$ a day was one of the finest cost- cutting moves we ever made".
Effects:
- substantial queues for Ford jobs
- High retention rates
- significant increases in profits and productivity (although hard to fully attribute to 5$ a day policy)
2. Job evaluation
- look slides.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.