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Performance Pay at Safelight Auto Glass - Case Study Example

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Performance Pay at Safelite Auto Glass Table of Contents Question One 3 Problem Identification by PPP Plan 3 Question Two 4 Pros and Cons of Switching From Wage Rates to Piece Rates 4 Question Three 6 Likely Consequences of Switch 6 Bibliography 8 Question One Problem Identification by PPP Plan The PPP (Performance Pay Plan) in Safelight Auto Glass was contemplated by Barlow who was bestowed with the responsibility related to operations in the organization…
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Download file to see previous pages The installer’s problem as identified in the PPP was related to the turnover rates. It has been found that the turnover rate of the company has been quite high because the glass installation was a seasonal business. The busy periods were spring and summer and it was found that at this time, the competition for new hires was mounting. However, the demand for the windshield replacement troughed and as a result the repair shops found it necessary to lay off many of their workers and hire them back during spring and summer. In addition to this, another biggest problem was associated with technicians who were lured by other companies’ offer, which promised to pay them a fraction more than what they were currently receiving. Therefore, as a result it was evident that the installers were changing their jobs since they were paid a Dollar more an hour and were allowed to take the company’s truck home during night. In order to reduce the turnover rate, Safelite also offered truck privileges for a time being, but then stopped it later. It was a matter of concern for the recruiters in HR with regards to getting technicians from other companies to come to Safelite. These were the problems that the PPP had tried to identify which were affecting the company’s productivity. Question Two Pros and Cons of Switching From Wage Rates to Piece Rates After going through the case study, it can be revealed that Performance Pay Plan was revised for both the managers as well as the technicians. It was decided to pay the technicians according to the piece rate system rather than the wage rate system which was previously being practiced. The plan was implemented for the technicians to receive the piece rate for every windshield that they installed. According to this plan, the number of windshield that the technician would install in a week would be accumulated. As a result, the technicians’ pay for the week was decided to be based upon the number of installations. The new plan brought both advantages and disadvantages to the technicians. Previously, the technicians received $10-$12 an hour. However, it was analyzed that according to the new PPP, the technicians would receive $15.22 per hour. Therefore, it can be examined that there would be a substantial hike in the salary of the technicians. However, the disadvantages of the plan for the technicians was that for the first twelve weeks of the plan, if the technician did not reach a weekly average which was equal to his previous hourly wage, then he would receive the hourly wage as a guaranteed rate. After that first twelve-week period, his guarantee rate would lower by 30% so that he gets encouraged to work towards the PPP rate. This is quite demotivating for the technicians. This may even discourage the technicians to improve the productivity. The other disadvantage has been that the installers were paid different rates depending on the area of the country in which they lived. It was also apparent from the case study that the technicians were at times asked to remove a work shield while the auto body work was being completed on a vehicle and then replace it later. The Safelite installers can be considered as good ...Download file to see next pagesRead More
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