Performance pay at safelight Auto Glass - Case Study Example

Because of this, Safelite created this incentive system to motivate their employees and decrease turnover. As additional motivation, they created a table to show their technicians how much more money they could make if they put in more effort. They were still guaranteed their hourly wage, but if they put more effort into their work and increased the numbers of installations, they effectively would be able to increase their wage by $3 per hour or more. In addition to the technicians, it was important that store managers were also able to partake in and understand this PPP schematic.

Depending on the size of the store, the managers were also expected to install a certain number of glass pieces, as well as maintaining the motivation of their staff. Safelite understood that there may be instances where a manager spending time installing glass would be detrimental, so they categorized their stores based on size. They largest, busiest store managers were not expected to install glass, but still needed to understand the PPP. Whereas managers in the smaller, slower stores were expected to spend some time in installation.

This, according to Bill Rapp, was an incentive for them to hire and maintain a small number of technicians. “We want them to think, ‘If I hire another tech, I’ll have less to install myself.’” ultimately reducing the manager’s overall pay. 1B. Does it introduce new problem? Yes, it does. A reduction in the technician’s guaranteed hourly wage may result in a huge turnover. If a technician was for some reason unable to install enough glass pieces to compensate himself to his satisfaction, he likely would move on to a competing company that would offer him the highest rate possible.

There are also a number of extenuating circumstances that were not taken into account. These include: scheduling errors or miscommunications, operational problems and inclement weather. All of these could prevent the technician from installing enough glass to make the PPP rate. Also, in winter time, the PPP was nearly impossible to attain, and the technicians were essentially at the mercy of the CSR’s, warehouse drivers and the employees at the manufacturing facility, who were not a part of the PPP plan.

The PPP plan also came across to the technicians as, “…We’re gonna cut your pay by 30% and you can make up the difference,” (Gassiot). This likely induced a fear in the Safelite technicians, encouraging them to move on to a company that did not gamble with their wages. 2A. What are the pros and cons of switching from wage rates to piece rate pay? The pros and cons are very similar to the answers to questions 1A and 1B. The introduction of the PPP was a great idea, in as much as it offered technicians and managers alike the opportunity to earn a higher wage.

Based on their productivity and how motivated they were, they could potentially increase their salary by $3 or more per hour. Given that the average technician in this study only received between $10 and $12 per hour, the additional $3 per hour or more was very enticing and motivating. The PPP did not only cover glass installation, which was another incentive. It covered windshields, other glass pieces, repairs, wipers and other items used and sold in the shop, which increased the ability for an installer to increase their pay rate even more.

This was good for the managers in the smaller,