SCENARIO:
A company has been giving its employees automatic pay increases annually. Recently, however, production has decreased, resulting in less profit. The president tasks HR with implementing a new goal-oriented pay plan to incentivize employees to increase production.
HR designs a pay-for-performance plan and trains supervisors. HR also sends an e-mail to all employees explaining the change, referring employees with questions to their supervisor.
As part of the new program, goal development is handled by supervisors. However, some supervisors feel that the change in pay philosophy is unnecessary and tell employees that the new pay plan will not work.
Twelve months pass, and, upon review of performance evaluations, HR finds that some appraisals lack goals and do not objectively measure employees' work performance. The results are recommended pay increases that are subjective and unsubstantiated by metrics.
Rumors that pay increases will be provided to employees who are favorites begin to impact morale, and work production continues to decline. Leadership is disappointed with the results of using a pay-for-performance system.
HR is instructed to temporarily revert to the original pay plan and complete a further analysis of its continued viability. Employees are satisfied; however, the reputation of the company and HR has suffered by this rollout, and production has not increased and profits are still low.
1. Which step should HR have taken to address supervisors who have openly communicated that the new pay plan would not work?
2. HR still believes that the cause of decreased production is the absence of incentive pay. Which recommendation should the HR manager include in a business case for an incentive pay program that would convince leaders while rebuilding HR's credibility?
3. The president and the HR manager agree on a 90-day period to address the problems related to workforce morale and the new pay plan. Which is the best first step for the HR manager to identify the root cause of the morale issues in order to develop a plan to address them?
4. Which approach should HR take first to encourage better alignment between the organization and the employees in order for them to accept and sustain the new pay system?
5. It is discovered that some supervisors are unable to effectively answer employee questions about the new pay plan. Which primary learning activity should the HR manager offer to prepare supervisors for their communication with employees?
6. Which first step should the HR manager take to change the current perceptions of HR with the company's managers?