Pay matters and employees does what they are paid for, Examples cited in this learning are Green Giant and Sears Automotive.These examples illustrate the fact that how employees finds different way to work around the system to meet the expectations of the pay.
Green Giant – Many years ago, when Green Giant discovered too many insect parts in the pea pack from one of its plants, it designed a bonus plan that paid people for finding insect parts. Green Giant got what it paid for: insect parts. Innovative Green Giant employees brought insect parts from home to add to the peas just before they removed them and collected the bonus.
Similar stories can be found in The book Compensation, 8/e by George T. Milkovich, Cornell University and Jerry M. Newman, State University of New York
Sears Auto Care centers: The Sears Auto Centers focused on undercar services, which consisted of brake repair, replacement of mufflers, shock absorbers, and struts.Sears cut the hourly wages of their mechanics, installers, and tire changers at their Auto Centers and put them a commission based system. They were required to meet certain product specific sales quotas such as a number of alignments per shift and dollar volume quotas based on the value of goods and services sold per hour.The Bureau of Automotive Repair (BAR) received 669 complaints against Sears. In response to the complaints, The Bureau of Automotive Repair of the DCA investigated Sears 38 times from December 1990 to December 1991. According to BAR, Sears employees recommended and performed unnecessary service or repairs in 34 of the instances and averaged an overcharge of $223 each. Their focus was on braking system repairs to get more commissions.
So creating a compensation with out these loopholes is challenge for HR personnel.This was discussed this week in my MBA HR course – compensation and thought it is intersting to blog these true compensation facts from the big corporates.