Question

1) A firm that makes car parts wants to adopt pay schemes that will best motivate its various workers to be productive. They hire you as a consultant. a) The firm is able to easily and accurately measure the productivity (including quality) of individual workers who make windshield wipers. What would happen to the productivity of the firm's windshield wiper division if it started paying per wiper of acceptable quality? Why? b) Seats are assembled by teams of workers. The firm can observe the productivity of each team, but not individuals within a team. What problems might the firm encounter if pay is based on team productivity? How might your answer vary with the size or composition of the teams? c) The firm employs a number of young, college-educated workers in its design department. They also employ older workers with similar education but more experience as managers in the firm. They are trying to decide if they should use pay-for- performance or career concerns (promotions, etc.) to motivate each group. i. Which group would best be motivated by career concerns? Why? ii. Which group would best be motivated by tying pay to performance? Why?

Answer 1

(a). If the firm starts to pay based on the quality of the wiper then the overall productivity of the workers will increase as they will not get paid only based on the quantity of the wipers that are produced but also on the basis of its quality. Workers who will be able to produce wipers of good quality will only get paid. Hence, because of this workers will focus more on quality of the wipers and not on the quantity. The motive behind this will be that they will be rewarded for their efficiency.

(b) If the firm pays the workers based on the team then there might occur differences within the team as some people of the team might try to work hard to earn the rewards whereas other members of the team might not work thinking that let the others work hard and I'll be paid even if I don't work as the whole team will get reward regardless of the individual contribution by each team member.

This kind of attitude might demotivate other workers who were earlier working hard and they might also stop working thinking that why should we only take all the pain and put in all the efforts. Another problem which can occur in this kind of compensation pattern is the problem of difference of opinion. If there will be huge number of workers in a team then there might occur difference of opinion between the team members as each one will have diifferent style of working and different outlook towards looking at a problem, forming sub groups within a larger group which might again destroy the overall productivity of the entire firm.

Teams should be formed in a way that they are of less size and should comprise of all kind of workers both productive and less productive. In such a team a productive worker might take the charge by coordinating between the efforts of all the team members. This way he might suceed in motivating the less productive workers so that they also become equally productive improving the overall productivity of the team.

(c) (i). According to me, the workers belonging to the older group will be more motivated career concerns as they are working at manegerial positions and have years of experience, so money is not a motivator for them as they are already earning enough money. Hence they would get motivated if their efforts towards the firms would be appreciated by giving them promotions, etc. In the Maslow's need of hierarchy also he has mentioned that workers belonging to the upper level in the hierarchy are much motivated by rewards such as promotions, awards, etc. Hence older workers will be the ones who get motivated by career concerns.

(ii). The young college educated workers having no experience will get motivated when they will would be rewarded based on their performance as they have just begun their carrier and are enthusiastic towards their work because of which their performance can be improved by paying them based on their performanceso they work harder towards achieving their goals. Also Maslow in his hierarchy theory has mentioned that workers belonging to lower level who have started their job have the basic needs and do not care more about recognition based on promotion instead they want and like to get recognized on the basis of their performance where they can earn bonus for their performance. Hence, wyoung workers can be motivated by tying their pay to performance.