Metropolitan Furniture Piece Rate & Team-Based Pay analyze the incentive plan scenario at Metropolitan Furniture and to recommend an incentive plan that wo
Metropolitan Furniture Piece Rate & Team-Based Pay analyze the incentive plan scenario at Metropolitan Furniture and to recommend an incentive plan that would address their requirements. The case and questions are in the attached file. Single spaced, Ariel type 10 font. Cite sources if any. Jack Hopson has been making wood furniture for more than 10 years. He recently joined
Metropolitan Furniture and has some ideas for Sally Boston, the company’s CEO. Jack likes
working for Sally because she is very open to employee suggestions and is serious about
making the company a success. Metropolitan is currently paying Jack a competitive hourly
pay rate for him to build various designs of tables and chairs. However, Jack thinks that an
incentive pay plan might convince him and his coworkers to put forth more effort.
At Jack’s previous employer, a competing furniture maker, Jack was paid on a piece-rate pay
plan. The company paid Jack a designated payment for every chair or table that he
completed. Jack felt this plan provided him an incentive to work harder to build the
furniture pieces. Sally likes Jack’s idea; however, Sally is concerned about how such a plan
would affect the employees’ need to work together as a team.
While the workers at Metropolitan build most furniture pieces individually, they often need
to pitch in and work as a team. Each worker receives individual assignments, but as a
delivery date approaches for a preordered furniture set due to a customer, the workers must
help each other complete certain pieces of the set to ensure on-time delivery. A reputation
for on-time delivery differentiates Metropolitan from its competitors. Several companies that
compete against Metropolitan have a reputation of late deliveries, which gives Metropolitan
a competitive edge. Because their promise of on-time delivery is such a high priority, Sally is
concerned that a piece-rate pay plan may prevent employees from working together to
complete furniture sets.
Sally agrees with Jack that an incentive pay plan would help boost productivity, but she
thinks that a team-based incentive pay plan may be a better approach. She has considered
offering a team-based plan that provides a bonus payment when each set of furniture is
completed in time for scheduled delivery. However, after hearing from Jack about the
success of the piece-rate pay plan at his previous employer, she is unsure of which path to
take.
Questions:
1. 4-6. What are some advantages of offering a piece-rate pay plan to the furniture builders
at Metropolitan Furniture?
2. 4-7. What are some advantages of offering a team-based incentive pay plan?
3. 4-8. What do you think Sally should do?
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