This paper presents a scoring system to use in negotiations regarding the following issues: worker autonomy and target production levels at a new plant of Adam Baxter Company; group incentives; the location of the plant; the escalator clause; wages and benefits.
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Scoring System for Adam Baxter Company
Issue 1: Worker Autonomy and Target Production Levels
- Maximum value: 30 points.
- Eliminate worker autonomy, increase daily targets and productivity by 70% – 30 points.
- Decrease worker autonomy, increase daily targets and productivity by 65% – 20 points.
- Slightly decrease worker autonomy, set daily targets, and increase productivity by 50% – 10 points.
- Maintain worker autonomy, set daily targets, and increase productivity by 20% – 0 points.
Issue 2: Group Incentive Systems
- Maximum value: 25 points.
- Completely eliminate incentive payments (0% of the base pay) – 25 points.
- Significantly reduce incentive payments (10% of the base pay) – 20 points.
- Reduce incentive payments to 20% of the base pay – 15 points.
- Reduce incentive payments to 30% of the base pay – 10 points.
- Reduce incentive payments to 40% of the base pay – 5 points.
- Preserve incentive payments as 60% of the base pay – 0 points.
Issue 3: Location of the New Plant
- Maximum value: 20 points.
- Locate the plant outside Deloitte, eliminate worker autonomy, decrease wages, eliminate incentives, 100% productivity – 20 points.
- Locate the plant outside Deloitte, eliminate worker autonomy, decrease wages and incentives, 95% productivity – 15 points.
- Locate the plant in Deloitte, eliminate worker autonomy, decrease wages and incentives, 100% productivity, no-strike pledge – 10 points.
- Locate the plant in Deloitte, decrease worker autonomy, wages, and incentives, 80% productivity – 0 points.
Issue 4: Escalator Clause
- Maximum value: 15 points.
- Stop automatic increases in wages depending on Consumer Price Index (CPI) – 15 points.
- Reduce increases in wages to 30% of CPI – 12 points.
- Reduce increases in wages to 70% of CPI – 10 points.
- Defer increases in wages until the new plant starts operating – 5 points.
- Maintain automatic increases in wages – 0 points.
Issue 5: Wages and Benefits
- Maximum value: 10 points.
- Increase wages to $12/hour and eliminate bonuses – 10 points.
- Increase wages to $11.5/hour and decrease bonuses by 50% – 8 points.
- Decrease wages to $8/hour and preserve bonuses – 5 points.
- No changes in wages ($10.69/hour) and bonuses – 0 points.
Rationale and Analysis
Worker autonomy, productivity, and group incentives are scored highly because of their priority for Adam Baxter Company. The next important issue to discuss is the location of the new plant which can influence the company’s profitability. The escalator clause and wages are scored lower as the absence of positive changes in these areas is not risky for the company in comparison to the above-mentioned issues.
The target for worker autonomy and production levels is associated with the complete elimination of employees’ autonomy and the increased daily targets and productivity. The reservation point is associated with decreasing worker autonomy, raising daily targets, and increasing productivity by minimum 65%. The option related to moderate decreases in autonomy and increases in productivity can be viewed as a tradeoff.
After discussing worker autonomy, it is important to focus on achieving the complete elimination of incentives which is the target for the management because of their negative impact on profitability. The reservation point is the reduction in incentives to 10% of the base payment to avoid demotivating workers. The next important issue is the location of the new plant, and the target is the location outside Deloitte. Still, it is possible to agree on locating the plant in Deloitte while increasing production levels and eliminating worker autonomy. For the escalator clause, it is preferable to stop automatic wage increases completely, but the reduction in wage increases to 30% of CPI is also acceptable.
It is more profitable to increase wages of workers without depending on incentives. Therefore, the target is the increase in wages without adding bonuses, and the reservation point is the decrease in wages while preserving bonuses.