Hancock Products
Redesigning the incentive program at Hancock Products
Bill Phillips, the chief financial officer, and chief administrative officer of Hancock Products came up with a new incentive program that was meant to motivate employees at this firm. When he joined the firm, he realized that the incentive strategy that was in use within this firm was not only ineffective but also very ambiguous in terms of defining how the actual rewards are given to the employees. The new strategy was now based on the volume of work done by the employees. For instance, the employees at the call center were now compensated based on the number of calls they handled and the e-mails they addressed per each given period.
To Bill, this was the best strategy for motivating the employees to increase their output. However, this compromised the quality. Employees redesigned their focus, from the need to achieve success in everything they did to the desire to increase the volume of what they did. A good demonstration is given in one of the conversations between two employees. From the case, we see one of the employees advising her colleague not to mind about the quality as long as the action is taken within the set deadline. This is a clear confession that employees at this firm are now focused on perceived performance other than actual delivery of quality service to the clients. It is for this reason that it will be necessary to redesign the incentive program at this firm.
The new incentive program will focus on improving the skills of the employees in everything they do and motivation them to deliver positive output in all their assigned tasks. This means that employees’ rewards will be based on the quality and quantity of their output. The firm will continue using the current metrics to determine the quantity of the output per employees to define the incentives they receive. However, a new metrics will be introduced to measure the quality of work that employees deliver to the clients. The employees will be informed that quality of their output will be determined by a number of factors such as timeliness, responsiveness to the clients’ needs, and ability to achieve the set targets effectively. The firm will introduce a new system where clients will be encouraged to give their feedback as soon as they get their products on how well their needs were met. The feedback from the customers will be used to reward employees as part of the incentives. This will be critical in avoiding cases of complaints such as the ones witnessed during this important meeting at a time when the CFO thought that everything about customer satisfaction was perfect.
The new incentive program will also emphasize creativity and innovativeness among the employees. From the analysis of the case presented, it is apparent that one of the most important ingredients for sustainable success at this firm is creativity within the workforce. According to Kotter, employees may become very flexible when they realize that a new policy is only focused on improving the revenues without taking care of their interests (62). They can easily manipulate figures and fake success to please those in authority and even get material benefits. That has already started happening at this firm, but the management has time to change this negative trend.
Employees should be encouraged to be thorough in what they are doing, and be creative as much as possible. A reward for creativity should be part of the incentives that should be awarded to the employees. At the end of a given financial period, the management should review new trends and approaches to handling tasks at the firm in a more efficient manner. Individuals employees who were responsible for developing such new approaches should then be rewarded as a way of congratulating them, and informing them that their effort shall always be rewarded. This new incentive program will encourage the employees to keep a close interaction with the customers and make an effort to ensure that their needs are met satisfactorily.
How the proposed plan is better than the current plan in place
The proposed plan is an improvement of the current incentive plan that is currently in place. It addresses some of the fundamental weaknesses that the current plan has in enhancing sustainable development. There are several weaknesses in the current system that the new system will address. The first one is the creation of unmanageable pressure on the employees that makes it impossible for them to deliver quality work. One of the employees complained about the number of tasks that she had to accomplish.
This statement clearly defines what is driving employees at this firm. They are very keen on retaining their bonuses that they have lost focus on what is important for the firm. Some of them are pushed to the extreme as they try to ensure that they achieve the set targets. It is like a punishment, as demonstrated in this statement. They do not toil and sweat in this firm to achieve success in what they are doing. They struggle to ensure that they create the perception that they are very hardworking individuals within the organization. As human beings, they may burn out due to this massive pressure. When this happens, then the overall output at this firm may fall at unprecedented rates. This new plan will solve this problem by ensuring that employees are assigned tasks that they can accomplish when they are working at their optimum, without necessarily straining in what they do.
The second weakness of the current plan is the inability of the top managers to detect problems with the system within the shortest time possible. Bill, the chief financial and administrative officer at this firm was sure that his report was very impressive. The report given to him showed that everything was perfect, making it difficult for him to choose appropriate items to discuss in the meeting. In his own words, he was spoiled for choices because the review showed that his strategy had yielded nothing but success. The little complaints from the employees were expected as he introduced tougher rules that defined the firm’s operations. However, what came as a shock to him were the direct complaints from the clients about the service delivery at this firm. The very issues he believed were signs of success turned out to be major areas of weaknesses at the firm. For instance, his report indicated that on-time delivery of products had improved to 92% and this was one of the most important agendas he had highlighted in his speech. As it turned out, however, many customers complained that the firm would always set delivery dates instead of following the requests made by the clients.
The successes registered in terms of on-time delivery were based on the dates set by the sales force, not customers’ requests. This made it possible for the sales force to meet the deadline without much struggle, to the displeasure of the clients. In this new plan, the focus will be put on following the request of the customers. Success will be measured by how well the interests of the customers are met, by maintaining a regular feedback system for the clients as soon as the product is delivered to them. In cases where the deadline set by the clients cannot be reasonably met within the current deadline, the management can introduce a system where the responsible sales representatives will make a passionate plea to the customer to adjust the deadline, citing the current workload that has to be accomplished by a given deadline. Of interest will be convincing the clients themselves to adjust the deadline without forcing them to accept a deadline set by the workforce.
This new incentive program will promote teamwork that is missing at this firm. When one of the sales representatives complained that the task she had at hand was extremely challenging, what would have been expected of the colleague was an offer to help in addressing the challenging task. However, that was not the case. The advice she was given was how to cheat the system by following shortcuts that would lead to customer dissatisfaction. The new plan promotes creativity and innovation, and this comes with teamwork. Creativity can only flourish in an environment where people share problems. It is out of sharing and helping to solve these problems that an innovative idea will come out. This will improve the overall performance of this firm. It will not only reduce the complaints of the clients but also lift the morale of the employees as they work in a new setting where everyone views other employees as members of a united family.
How to Implement the New Plan
According to Capretta, Clark, and Guangrong, the approach used in implementing a new plan always determines the level of success such a plan would have in an organization (43). It is possible to come up with excellent plans on how to solve a given problem, but it is not always easy to implement such programs in a practical context. In this case, the set plan of a new incentive program will be implemented in a very careful manner. The first step will be to break down the plan into actionable objectives. This will involve defining objectives that employees should achieve when handling various tasks assigned to them. The objectives then are communicated to them clearly and concisely. This new strategy will involve changing some of the common practices at this firm. According to Sutton, when implementing change, there is always the possibility of the employees resisting the change (50). This is always caused by the fear of the unknown. Some employees may develop a fear that the new system will target them unfairly. Others may fear that they may be unable to perform optimally under the new system that shall be introduced. Yet another section of the employees may feel that the new system may come up with new dynamics that may take too long to learn and deliver quality output based on them. All these fears must be addressed. Kurt Lewin’s Unfreeze-Change-Refreeze model of change management may help in implementing this new plan without causing any fear or resistance among the employees.
As shown in the figure above, this model emphasizes the need to unfreeze before introducing an actual change. The unfreezing process involves the creation of a debate among the stakeholders and explaining to them reasons why the current system which is in use has become unsustainable. The stakeholders must understand why change is necessary and specific areas that the expected change will address. This makes the employees mentally prepared to deal with the new system that is to be created. When the stakeholders have appreciated the need for change, then the actual process of introducing the new concept shall begin. In this case, employees will be informed of the new incentive program, and how it will be applied. The employees will be informed about their roles at the firm and specific objectives they are expected to achieve. The final stage of the implementation will be to refreeze. The refreezing process involves internalizing the new concepts and accepting them as an integral part of the policies and values of the firm. The stakeholders will be expected to master the new concept during this period and use it to redefine their roles at the firm.
Kingston Inc
Leading Change at Kingston
Kingston Inc. is facing a serious problem that may harm its ability to achieve success in the future. The case presented here shows that the firm has become profitable after so many years of running below its capacity. Allan Knight, the current chief executive officer, was brought to the firm to help in solving the problems that were bedeviling Kingston. He came up with a new concept that redefined operational procedures at the firm. He diagnosed the entire organization and identified all areas of weaknesses. One of the major changes he brought in this firm was redesigning the entire human resource. Employees’ output was determined and those who were found to be underperforming were laid off immediately. Some of the branches that were not profitable were also shut down as a way of remaining with a lean but effective workforce.
The compensation at the firm was also changed from fixed salaries to one based on commission. This brought the impact that Allan Knight and the board of directors at this firm wanted. The firm started experiencing improved sales, and its profits increased. However, a new problem emerged that the chief executive officer had not anticipated. Given the current situation, Allan Knight will need to redesign a new way of leading change within the organization. First, he will need to avoid making sudden major changes without informing all the stakeholders about it. This is what has brought about the current problem. The manager may need to use Kurt Lewin’s Unfreeze-Change-Refreeze model of change management where every change process is done systematically and in a consultative manner. He may also need to use the Transformational Leadership Theory in managing change. This means that when planning to make major changes, he will need to involve the stakeholders and make them understand why it is necessary. He will also involve them when coming up with the change strategy.
Set of actions that have taken place and what should now occur
The sudden changes made by the top manager and lack of inclusiveness when making decisions has created fear and anger among employees. The fear that they have and the bitterness about how some of their colleagues were sent away from this firm must also be eliminated. The problem of this firm, according to all the employees currently working at Kingston, is with the top leadership. The solution must be seen to come from this very position as it trickles down the lower ranks. The top manager will need to introduce a new program where all the employees are involved in making major decisions at the firm such as the layoffs that brought issues among the employees. It is important to note that employees are not having any problems with the compensation policy used at this firm.
As Sutton says when the problem is not financial, it is important to avoid using monetary policies to address it (48). Understanding a given problem and addressing its actual root-cause is always very critical. In this case, the problem of the employees is that they feel the top management has broken up their family by laying-off some of the most important employees that were trusted and loved by all. They feel that they no longer have the capacity to understand what might be happening o the current family tomorrow. The future of their family at the firm, as clearly stated by one of the employees, is extremely uncertain. Above all, they are sad that the management is not keen to take into consideration their thoughts and views when making major decisions. These are the issues that this program will have to address.
The proposed strategy will aim at giving the employees the power to determine the future of this new family that has remained after the layoffs. The chief executive officer must be seen to be making a serious commitment to addressing the concerns of the employees. This is the best way of doing this to eliminate fear, anger, and uncertainty among the employees. Through this strategy, the top management will be telling the firm’s employees that going forward their views will be sought when making critical decisions that directly relate to the firm’s workforce. This new strategy will be very important at this stage where many employees are considering quitting the firm. First, this may be the best way for Allan Knight to apologize to the employees. What this will mean to them is that such mistakes will not be repeated in the future.
According to Ginka and Barsoux, employees are the most important resource in any organization because their activities directly define a firm’s future (56). Many organizations are now involving their employees very closely when making critical decisions about how to address various challenges. This strategy makes all the employees feel that they are part of a large family where the opinions of everyone count. Even if the views of the chief executive prevail, everyone will always be happy that they were allowed to take part in the decision making process. They will feel that the top managers are sensitive to the forces affecting the junior employees. Employees always understand forces that may be making it difficult to achieve specific goals. Involving them in the decision-making process helps in coming up with a solution that will be acceptable, even if it means part of the workforce may need to be laid off.
Currently, Allan Knight is satisfied with the performance of the current employees. This means that there will be no layoffs shortly. He now has the right family he needs to achieve success within the remaining years he will be the firm’s chief executive officer. This should be done through various subcommittees at all the branches led by line managers. Whenever a critical decision has to be made, then employees will be requested to find the time, especially after the normal working hours, to sit in their subcommittees and give their views on the best approach that should be followed. Such views will then be consolidated when branch managers meet the chief executive at the management’s committee meeting. Before the implementation, the employees will be informed of the consolidated report and the accepted cause of action based on the information gathered from individual employees of the firm. In cases where there are issues of controversy, this program will require the chief executive officer to sit with all the top level and mid-managers in a consultative forum and find an acceptable compromise. The chief executive will then communicate with the entire workforce, through a memo or any other acceptable approach, informing them about the compromise decision.
The policy also promotes the open door policy of management where any employee can visit the chief executive officer of the firm whenever one feels this is necessary. The aim here is to eliminate the current feeling of the employees that the current head of this firm is out of touch with the realities within the organization. The notion that he does not have any concern for his employees must be eliminated. It is important to note that the strategy does not propose the creation of a system where the opinion of the employees will prevail over that of the chief executive officer. That may create anarchy within this troubled firm. On the contrary, it proposes a system where the top manager will make decisions after being informed by the views of the employees. This will make such decision universally acceptable and easy to implement. It is important to note that downsizing has been a common phenomenon within this country (Kellerman 88). It is always a painful process and everyone knows about it within this firm. What is paining them is that they were neither informed about it nor involved when it was executed. This approach is just a reminder to them that never again will such an event occur within this firm.
How insights from the author are useful for understanding the role of leadership in this situation
The insights from the author are very useful for understanding the role of leadership in such delicate situations. Allan Knight has demonstrated visionary, task-oriented, and expert leadership at this firm. When he was hired at this firm about two years ago, the firm was barely making substantial profits in its operations. It lacked a sense of direction, and the concern for most of the stakeholders was to ensure that the family of workers remained undisturbed. When he came in, he quickly identified areas of weaknesses within the firm and moved with speed to address them. He was very specific on the tasks that every single employee was expected to engage in and the desired outcome. As an expert and visionary leader, he reorganized the operations at this firm and made sure that every department clearly understood what was expected of it. As a task-oriented leader, he redefined the approach used in compensating the employees as a way of ensuring that they delivered the best outcome possible. He realized that by offering employees a fixed salary they lack a sense of motivation that would drive them to deliver more sales in the market. For that reason, he changed the compensatory approach to be based on the commissions. This strategy was meant to reward high performing employees at this organization. As a leader, he perfectly understood issues that had to be addressed to turn around the company.
The author also portrays Allan Knight as a manager who lacks charisma and transformational leadership skills. The main problem that this firm is currently facing is the fear of uncertainty among the workforce. This fear is slowly turning into anger and defiance among the employees, especially the junior workforce who were worst affected by the layoffs. It has been over a year since the layoff took place, but the resentment among the employees is growing stronger. This can only mean that something is fueling the anger and resentment towards this manager. Employees at this firm consider him detached from them. Allan is almost a dictator when it comes to managing the employees. A clear example confirming this is when Thomas Wazinsky, the head of HR, opens up to him and tells him of his fears. Such a senior manager who should be working with the chief executive harbors a fear that the chief executive can fire him at any time. This demonstrates the seriousness of the issues at this firm. If the head of the human resource department is living in fear, not knowing the plans that the top manager has in store for the firm, then it is easy to understand why the entire workforce is heated up. No one at this firm feels safe, and very few are comfortable when they are in presence of this leader.
The author demonstrates that there is a need for the top managers to have a clear balance between concern for economic success and concern for people. According to Collins, lack of this balance may spell doom in the future of a firm (71). Knight’s predecessor overemphasized the concern for people, forgetting that the future of the firm also relied on financial success. On his part, Knight is overemphasizing financial gains, paying little attention to concern for people. These two forces, which sometimes may be contradictory, must be balanced effectively to ensure that a firm achieves sustainable development. To Allan Knight, he will need to embrace principles of charismatic leadership as he stays at the helm of this firm.
Works Cited
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Collins, Jim. “Level 5 Leadership: The Triumph of Humility and Fierce Resolve.” Harvard Business Review 67.1 (2001): 67-76. Print.
Ginka, Toegel, and Louis Barsoux. “How to Become a Better Leader.” MIT Sloan Management Review 533.12 (2012): 52-59. Print.
Kellerman, Barbara. “What Every Leader Needs to Know About Followers.” Harvard Business Review 78.21 (2007): 84-91. Print.
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Sutton, Robert. “How to Be a Good Boss in a Bad Economy.” Harvard Business Review 87.81 (2009): 42-50. Print.