Performance Pay at Safelite Auto Glass - Case Study Example

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Performance Management is undoubtedly one of the most important areas in managing the operations of a business enterprise. It is clear that the present management of Safelite Auto Glass, particularly the CEO John Barlow and COO Staglin want the firm to be profitable and expand into new markets…
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Performance Pay at Safelite Auto Glass
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Download file to see previous pages Performance Management is undoubtedly one of the most important areas in managing the operations of a business enterprise. It is clear that the present management of Safelite Auto Glass, particularly the CEO John Barlow and COO Staglin want the firm to be profitable and expand into new markets. Ever since the change of management in 1987, there have been efforts towards expanding Safelite’s reach and markets. For this purpose, Barlow hit upon the idea of allowing the setup of franchise operations all across the USA, a move which increased the number of Safelite outlets from 250 to 550 within two years from 1987 to1989 (Hall et al., p 1) . The problem here was that stores were opened up rather haphazardly and customers had problems locating the stores. To deal with this issue, the CEO then hit upon the idea of using mobile trucks to provide repair and installation services to the customers at their own location. There was no need to bring the vehicle to the repair outlet. But here again the problems faced were coordinating the needs of the customers and reaching the locations correctly. To solve these issues, it was decided to open up warehouse style locations complete with technicians and fitters who could service, repair and fit out a car windshield all from this central location. The communications network installed here was used to route calls to the technicians so that service and repair work could be carried out with a minimum of time wastage. A limiting factor here was that too many calls came into the more central and popular locations while others stayed idle, but this too was being addressed by forwarding calls to locations that were not so busy. It is quite evident that these expansion efforts came with a cost. To make more use of idle capacity on the part of those warehouse locations that were not too busy, the managers of those locations had themselves been put on a performance pay plan that required them to do some actual fitting, repairing and servicing when the place was not too busy. Quite possibly some of the managers might have resented this double role. Yet the fact is that they had to improve the productivity of the warehouse before they could be considered for a rating upgrade. While it is clear that the present performance pay plan is not working, part of the reason is management’s lack of strategic long term thinking. This is evident from the way that problems creep up and are solved on the run. In the beginning the franchise system created a glut of stores in some locations and scarcity in others; it also created internal competition which was counterproductive. The use of trucks as mobile repair shops was innovative but included a cost that should have been considered before launching this initiative. Safelite’s own deficiencies in the current performance pay plan make it seem that the workers are being discriminated against after the initial guarantee period of 12 weeks have passed. At the initial stage, the worker is being guaranteed a 12-week basic wage rate depending on his previous productivity. But after 12 weeks have passed, the worker has to prove himself again by meeting the difference and also make efforts to increase his productivity. This might not always be possible due to seasonal variations, intensity of competition and manager bias in a particular warehouse. As indicated, the workers would take it easy in the first 12 weeks of the plan unless pushed by conscientious managers. They would prefer to play pinochle (Hall et al., p 5) while maintaining a minimum of productivity. Secondly, despite the best communication systems there is a lack of proper coordination between the order takers on phone and the technicians and the drivers. This point needs to be addressed because it is having an ...Download file to see next pagesRead More
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