In 2001, a Chennai- based two- wheeler major introduced a bonus scheme for its employees. Employees covered under this bonus scheme are evaluated through a three-tier process- (1) meeting production schedules, 2) maintaining machines, and (3) reducing overtime, scrap and shipping errors. In 2002, productivity surged, and some employees even added as much as 15 per cent to their paychecks. The two- wheeler company started facing competition from international players and also was riddled in patent issues. A court order forced them to stop production of many models, causing significant manpower restricting successive drop in sales, the company was forced to withdraw the bonus scheme, and asked employees to be prepared for a financial structure, which would mean a reduction in their benefits and perks. This message had a highly demoralizing effect on the employees and many efficient designers and engineers left their jobs to join the competitors. The trade unions also took up the matter as the workers only faced pay- cut while the senior management remuneration remained unchanged.

A portion of the employee compensation is paid as variable pay, of which bonus is a major part. Other variable incentives are based on allocated weight age on group target achievement. To rationalize the compensation cost, the company decided to further switch over to individual performance track record. A formal announcement to this effect made the workers furious and led to workers protest, resulting in production loss an a regular basis. The company made it clear to the employees that their behavior would lead to the closure of the company, which would put them in financial and went on an indefinite strike.

A few months later, the company obtained clearance from the court and the production of all the premium high- selling brands, which was stopped earlier, could be resumed, as the patent issue was found to be untenable. The company feels that the whole issue was masterminded by competitors to poach valuable employees from the company.

Question:

1. Study the case and provide an alternative compensation design, which would redress the problem faced by the two- wheeler major in Chennai.

Caselet 2

You are a Manager, the Financial Analysis department of Mendelssohn's Insurance. Your assistant, Denzil Worsnip, has worked for you two years. He is 24 years of age and joined Mendelssohn's as an 'A' level entrant. He progressed through the support functions, from junior clerk to section head. He showed such promise that the company sponsored him at evening classes to study for the accounting technicians exams. He is over half way through this at the moment and is due to take his final exams in 9 months time.

His aim in joining your team was to use the job as a stepping tone to one of the sales teams. You were not bothered that Denzil looked on the job in this way a you are all in favor of encouraging people to get on.

In any case, you know it is exceptionally difficult to get onto one of these sales teams, particularly these days with the company placing so much emphasis on its graduate recruitment. You know he was put out recently when the Unit Trust team hired a graduate trainee, as he had put a lot of effort into chatting them up. Nevertheless, Denzil does not accept that the new recruit had an advantage in that he is a qualified actuary.

Until a few months ago, Denzil had been an above average employee. He was always cheerful, enthusiastic and willing. He also picked things up quickly. You used to have regular weekly team meetings. You used to use these meetings to get suggestions on your new procedures. Denzil used to make an excellent contribution to these meetings; he was always full of ideas. It is a shame that there is now so little time for these meetings.

You often used to give Denzil some one-off projects to do. He always handled them well and he was always able to squeeze in the extra work. He was also quite prepared to work late time for these meetings.

You often used to give Denzil some one-off projects to do. He always handled them well and he was always able to squeeze in the extra work. He was also quite prepared to work late without overtime pay.

In the last few months, he seems to have really changed. The other day, he refused to take on a job you wanted him to do. You remember that about four months ago, a similar thing happened. He complained that he had enough to do and could not take on any more and that he was fed up of working every day until 8'o clock. You were annoyed at this because you felt Denzil could take on the extra work, he would just have to assess his priorities better. Anyway, it was only additional routine work you wanted him to do. You knew he was too busy to do ant projects so you were doing this yourself to keep the pressure off Denzil. As for all the overtime, partly, Denzil does go in for long lunch breaks. Networking he calls it.

The loss of one person has put additional pressure on the team, but you feel you should most of it. The others just need to find more efficient working practices.

Denzil has also recently taken to being very off-handed to people. You have overheard him several times being rude, both on the 'phone and in person' to people from the business teams who ask him for information or help. He has been very rude to you too and obviously completely fails to appreciate the extreme pressure you are under. Last week, for instance, you got your team together to tell them about the new procedure, you are implementing, Denzil sat there fuming and then started carrying on at you for having drawn up this new procedure in secret and also claimed the procedure to be unworkable and pointed out some faults. The faults he mentioned were valid. But they are easily rectifiable. You know perfectly well that the new procedure is workable and it will save them all considerable time and effort as it cuts out a layer of admin. Denzil is just being obstructive. Maybe he has girlfriend problem and he is taking it out on the office?

Questions:

1. Identify aspects of Denzel's behavior that indicate that he was well-motivated.

2. Identify those actions taken by the Manager that helped to motivate Denzil.,