Case Analysis – The Best-Laid Incentive Plans

This paper seeks to answer two questions from the subject area entitled The Best-laid Incentive Plans by Steve Kerr. The first one is to identify pertinent metrics while the second one is to discuss the potential motivator and dis inducement characteristics of your metrics.2. Questions and Answers2.1. Identify relevant metricsThe relevant metrics creation used by Harim were efficiency and monetary value step-down which are cerebrate on employees and company activities rather than on the node. This fact is based on Harims plan to bring down bells which had caused the placing for savings on all the factors that could influence cost (Kerr, 2003). As proof it was commented that the company has found it self paying out bonuses that still the profitability of the company did non improve (Kerr, 2003).2.2 Discuss the potential inducement and disincentive characteristics of your metrics.The potential incentive characteristics include the fact the employees are given out bonuses fo r having gaind savings. Producing saving could be beneficial to the company as this depart enable it to ingest coin for growth as well as sustaining its working capital requirements.On the other hand, the potential disincentive characteristics include the fact that the syllabus is non fully understood by the employees as to the real purpose of the cost reduction and how it would redound to their benefits. other disincentive characteristic is that it is more employee-focused than customer -focused which contributes to employees not understanding why they are the targets. The program also assumes that the boldness was not working hard enough while the employees know that it is not the usual case in most companies. This has the effect of affecting the self esteem of people in the organization and necessary their job morale.The program lacks a clear definition of the criteria for advantage. By failing to explain the cost reduction program the employees may not understand the bo ttom grade effects of the program. This could make them think that eventually it could result to their losing their jobs since their jobs also have cost to the company. The employees not seeing the big picture get out be confused and this could cause them to lose their loyalties to the company and this could be more smuggled for the company.The metrics program of Hiram focuses on the intermediary steps and assumes that such enhancements willing make a positive impact on the bottom line of merchandise (Kerr, 2003). By falsely assuming that short term positive impacts will result, the opposite could result because the employees cannot understand the direction that they are taking. Or although it could produce positive result in the short run, the long term success is actually being sacrificed.It may be argued that although the long term objectives or goals are broken down into short terms objective, focusing on the short objective may create more problems. To illustrate, although less employees could entertain less labor cost, it could also mean less customer operate and customer loyalty, which is usually built over long term but could be lost in an instant by failing to foretell their short term lacks as customers can switch anytime.Another disincentive characteristic is its failure to link with corporate strategy of marketing. Although the theatrical role and cost of provided services need to be controlled at manageable levels the need to have more satisfied customer are equally if not more important. By measuring only the amount of cost that will be saved without relating with amount of revenues that will be lost, the company is in a losing game from which it is clearly missing the point of any incentive program or performance metrics.3. ConclusionPerformance should first be measured in terms of revenues before using cost reduction for the essence of going into business is using up assets and resources to generate revenues that pass judgment to be higher that could cover up the expenses. Hiram program failed in this aspect. penKerr, S. The Best-Laid incentive Plans, Motivating People, Harvard Business Review Case Study, 2003