Write a 1200-1500 word paper in APA format that describes a strategic compensation plan for machine operators at Plastec Company. Refer to the descriptions of this company below. Include at least 3 referenced articles and cite them as appropriate. This paper should at a minimum address the following:
- What should Paul do to determine how Plastec compares with other area employers in terms of wages and benefits?
- How could Plastec use variable pay to motivate its machine operators to stay? To increase their productivity?
- The majority of the machine operators are in their mid to late forties, some with families, some without. What types of benefits would you suggest offering?
Plastec Company Description:
Now meet John and Roy, at the Plastec company.
"John, our production numbers are getting worse," said Roy, who is John's manager at the small plastic molding company. "What's going on?"
" We've laid off several people in my area," replied John.
"Can't you get them to work harder? asked Roy.
"Before the layoff, we had a lot of people quitting," said John. "And the ones who are left just don't do as much work."
"Why did we have so much turnover?" asked Roy. " What can we do to get these people up to speed?
"Well," said John, "Some of the people said they were quitting because they could make more money someplace else." "Others said it was a dead-end job and there was no place to go." "I had two people quit awhile back who said the health insurance was better at their new jobs." "And to be honest, I can see now that there are a few people who shouldn't have been hired in the first place so it was just as well that they left."
"We've got to do something," said Roy. "The company is going to grow a lot in the next few years and we've got to be able to produce a lot of product once we start getting more orders again. Our numbers need to go way up, not down. I think we'd better go see HR.
John and Roy had a good discussion with the Director of HR, Paul. They learned that the company tracks these metrics: turnover rate, benefits as a percent of payroll, and wages and benefits compared with other local employers. They also learned that the productivity issue and the problems with turnover before the layoff were complex and would require assistance from several HR areas: Total Rewards (Compensation and Benefits), Staffing, Talent Management, and probably Employee and Labor Relations too. They also got some ideas about interviewing and how to work with HR to recruit candidates when the time comes to hire more people again. The Training Manager stopped by and discussed skills and gaps with them, and showed them classes currently available for themselves and for their workers.
Paul, the Director of HR at our small plastics company, reviewed exit interview information from voluntary terminations in the past year, after his first discussion with Roy and John. Then he set up a meeting with them to discuss the results.
Paul: As I looked through the exit interview notes I found some patterns that hadn't been apparent before. The people who left because they got a better job or went to a company that had better promotion opportunities were all women or minorities. Were you aware of that?
John: No I wasn't.
Roy: But really, these Hispanic women don't really want to be the boss. They're not comfortable in the role.
John: We tried one of them as a lead one time but it didn't work out.
Paul: Have you mentioned your views about this to anyone else, inside or outside the company?
Roy: No
John: No
Paul: Good, because what you've just said could get us in trouble sometime. We'll come back to this issue later, but I want to continue with the exit interview information. I also noticed that several of the women who left said they were uncomfortable with a lot of the stuff that goes on out there on the floor. . We tried to get them to give us details, but none of them would. Can you tell me what you think they might have been referring to?
Roy: Gosh, I don't know what they would be uncomfortable with. Do you, John?
John: Yeah, I think I do. The guys like to joke around, tell jokes, you know, boys will be boys. Some of the women don't like it.
Roy: Well, I guess the guys shouldn't do that.
Paul: No, they shouldn't. And that's probably the reason some of the women quit. The kind of behavior you're referring to - off-color jokes and innuendos - is against the law. I can see we need to do some harassment prevention and diversity training around here. As far as hiring people for you now, what are your thoughts about the increasing Asian population in the area around our plant? I know in the past we've brought several Asian candidates in for interviews but nobody's been hired. Any reasons for that?
Roy: John and I both think that Asians are hard to understand - their English isn't so good. And when we had two Vietnamese working here a few years ago, they used to talk Vietnamese to each other and it was kinda weird.
Paul: We'll need to have some more detailed discussions about this too, but for now let me just say that the turnover we had recently is hurting your production numbers now, right?
Roy and John: Yes
Paul: You're going to need to make some changes in your assumptions about people, and in what you allow over there. I'm going to enroll you both in our Diversity and Respect training series. Let's get together and talk some more after that.
Roy and John: Ok.
When Roy and John attended the Diversity and Respect training, they were very surprised at a lot of the information.
John: I had no idea that telling off-color jokes was illegal, did you?
Roy: I sure didn't. I also didn't realize how many different ethnic groups we have in this city.
John: I did know about a lot of the ADA accommodations, but I didn't know that substance abuse can be considered a disability.
Roy: And I didn't know about the "job relevance" test - like requiring people to speak English at work, and other job requirements
There are probably some things in Chapter 3 that you didn't know as well. Employment laws are becoming more and more complex, and new laws are enacted often.
Paul: John and Roy, we've been talking about the turnover in your department and why so many people have been leaving. In addition to what I've already mentioned, several people who left said in their exit interviews that they were never sure exactly what their job responsibilities were, and they felt sometimes they were asked to do things that they weren't supposed to be doing. Do you know what they're referring to here?
Roy: Well, it's been quite awhile since we've had accurate job descriptions....
John: I've shown them what we have, but we've had quite a few changes in technology and so people are doing things differently now. Plus, we've been using teams a lot more now, and this doesn't show up in any job description we have.
Paul: I've been meaning to update those job descriptions, but it's quite a chore. Takes a lot of time.... I'll try to get to it as soon as I can. Maybe I can get an intern or somebody to help me.
Roy, the manager at Plastec, has several openings in his department for machine operators and some of the openings in are in John's area. He told Paul what he needed (and reminded him about those outdated job descriptions and how they would be helpful now). Paul posted the job on the company website and placed an ad with the local newspaper which also has classified advertising on the internet. He also posted ads on several local internet sites such as Craig's List. He found out that there is a Russian Community Center in the area and he worked with someone there to post an ad in both English and Russian.
The applications have started to come in.
John is preparing to interview several candidates for machine operator. He and Roy are having a casual conversation about it.
Roy: I've always just started with "tell me a little about yourself", and then I've launched into my thoughts about the job and this company. It's really about getting a "gut feel" about the person, more than the questions you ask.
John: Yes, I remember when you interviewed me. I guess your gut feeling about me turned out ok, but I remember leaving that day feeling like I didn't really know much about the job or the people.
Roy: Yes, it's been a long time since I interviewed you. Since then we've had training about what questions to ask, what questions to avoid, and all that stuff.
John: And how to get a good preview of somebody's job performance by asking about their previous experiences.
Roy: Right. Well, let me know how it goes.
Like Roy, many managers have mixed feelings about the best way to interview someone in order to predict job success. The interviewing and selection process most often involves a partnering of HR and the hiring manager. HR usually takes care of recruiting applicants, initial screening, setting up the interview with the hiring manager and perhaps some other things such as any pre-employment testing, post-interview communication, extending the offer, and post-offer activities. Interviewing, negotiating job offers, and conducting post-offer activities such as drug screens require a significant amount of time and attention from HR, not only so they can hire people who will be successful on the job and will stay with the company but also to ensure compliance with all applicable laws and regulations.
Behavior-based interviewing which is addressed in the reading assignment for this week, is currently the most popular interviewing method, although many interviewers may combine it with other types of interviews. The reasoning for this is that past behavior is the best predictor of future behavior. While a candidate may be able to paint a good picture of what they would do in a hypothetical situation, this has not been found to be a good indicator of what they would actually do. Most experienced HR professionals and managers can cite examples of people who have "talked a good game" but their actual on-the-job behavior has been very different. For this reason, the prevailing best practice in interviewing is behavior-based interviewing.
The average cost of turnover in the U.S. is three times the annual salary of each position; therefore, skilled testing and interviewing in order to select the best candidates and thus increase the likelihood that they will stay on the job longer, can have a significant impact on an organization's profitability.
John: Roy, I've interviewed several people for the job. They all look good, but when I look at their test scores, their job experience, and their answers to my questions in the interview, there are three that are ahead of the pack.
Roy: That's great - it's nice to have three good people to choose from. And you never know, we might have another opening sometime soon so we could hire whoever isn't selected this time. Which ones do you think you'll offer the job?
John: I think I'll bring them in for a second interview, have them meet with a few of the people in our department, and maybe you could meet with them? That should give us more information to make a decision.
Roy: Sounds good to me. I'll be happy to meet with them and let you know what I think. Let me know when they'll be in the plant.
John: Thanks, Ray. Talk with you later.
Paul arrived at Plastec Company 18 months ago, as the first HR professional the company ever had. Started fifteen years ago by two brothers, the company has been experiencing a "growth spurt" for the past 3-4 years, fueled by increasing demand for small plastic parts: computer keyboards, toys, airplanes....a wide variety of needs. Paul was directed by the owners to "use HR to keep us staffed up so we can grow" and to "keep us out of court." The company has a single location which is in an industrial park outside a major metropolitan area.
When the company was founded most of their workers were Caucasian and about 20% African-American because this was the racial make-up of the surrounding area (labor market). In the past few years people of many different ethnicities have moved into the area: Hispanics, Asians, people from India, Bosnians, Serbians, and Russians, among others. Plastec's employees are primarily Caucasian and African-American, although there are two Hispanic employees and one Vietnamese. There is a high demand in the local labor market for semi-skilled labor like the majority of the jobs at Plastec.
As soon as Paul arrived, he attempted to get relevant data and HR metrics so we he could understand the company's strengths and weaknesses regarding their labor force. While he was able to piece together some data, a lot of it just wasn't available or if it was available, it wasn't easy to retrieve and analyze.
Changes are afoot at Plastec Company. The owners believe that the company will experience rapid growth in the future, and that the current dip in orders is just temporary. Paul, the Director of HR, hired a Training Manager just before the dip in business, and this person conducted an assessment of the organization's needs and employee skills. A "training curriculum map", aka training calendar, has been introduced, and Roy and John are discussing their first review of it.
Roy: What do you think of that training calendar that came from HR?
John: They look like some good courses. I can see some of them in particular that would help me do my job. I just don't see how I'm going to get everything done here on the job and find time for training too. And I don't see how I can send my people to training and still meet production quotas.
Roy: I know what you mean. But one thing Paul mentioned to me is that the training is like an investment. You spend time doing the training, and you'll save time when you use the new skills and follow the tips you learn. Also, Paul said that a lot of those training courses are soon going to be offered online so we can take them when we have a spare minute.
John: I see. That will make it easier.
Roy: We've got to stay on top of the changes in our industry and in the market and one way is through training and learning. Let's look at the courses coming up on the training calendar and see which ones might be a fit for you and for your people. Then we can brainstorm how to find time for the training.
John: Ok.
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John: I told Felicia if she screws up any more orders, I'll have to fire her. She's been messing up bad lately. I really wish we could have laid her off but she had enough seniority to keep her job.
Roy: Is this the first time you've said anything to her?
John: Well, she knew she'd messed up before, but yes, this is the first time I said anything directly her about it.
Roy: When was her last performance review?
John: Oh, about 7-8 months ago. Why?
Roy: Did you give her good ratings?
John: Yes. Her work wasn't all that great then, and it's gotten a lot worse. But she said she needed a raise. I gave her a good evaluation so she could get it.
Roy: If her work wasn't all that great, why did you give her good ratings?
John: I just wanted to get HR off my back and get the form turned in. It's just paperwork.
Roy: You'd better go talk to Paul before you go any further. I think he'll tell you that if you gave her good ratings, you'll need to have some good documentation now to fire her. Also, they have a progressive discipline process now that you have to use before you can fire anybody. It's not like the old days when we could fire anybody who wasn't working out. Paul says the new ways save us a lot of money from lawsuits, though.
The next day John went to Paul's office.
Paul: We determine pay rates by comparing ourselves to other employers in the area who have similar types of jobs. We want to pay the "going rate" that others are paying. Felicia is already red circled, which means she's paid above the range for her job. And if she's not doing a good job.... well, that's not so good, is it?
Here are the steps in our disciplinary process. Let's see if you can help her turn her performance around:
1. Verbal warning (also document this in her file)
2. Written warning (also go over this with her in person)
3. Suspension without pay - for 3 days
4. Termination
Talk to her about what specifically needs to improve and set a follow up date to review progress. If there hasn't been any, then give her a written warning. Let me know if you have any questions, ok?
As Roy and Paul illustrate, more and more organizations are using systems not only to evaluate employee performance but also to provide the means for improving performance, particularly if the performance is unsatisfactory. The processes and systems described in Chapter 10 provide employees with feedback on their performance, evaluate their performance, and provide various means for improving their performance.
A wise HR manager will work with upper management to gain support and with all managers to implement an effective performance management system and disciplinary process. Often poor performance can be turned around, and an employee who might otherwise have been terminated will become an effective, productive contributor. Expensive lawsuits from terminated employees as well as the cost of turnover can thus be eliminated or reduced.
John: Hey Roy, I talked to Paul about Felicia. He said if we fire her now, we're asking for trouble. He said that we don't have much proof that she was doing a poor job, or that we'd warned her about it. Plus, she's a member of a protected class so that raises the stakes.
Roy: Well, at the risk of saying I told you so.....
John: Yes, you did. And I'm glad I went to see Paul like you suggested. Otherwise we could have been in deep trouble. So now I've got to give her a verbal warning and also start keeping notes about her performance - good and bad. Who knows? Maybe she'll turn over a new leaf.
Roy: John, I heard some folks are mad because the health insurance copay went up, is that true?
John: Yeah. I'm not real thrilled about it myself.
Roy: I know, I don't like it either. But the way health care costs are going up, you can't really blame the company...especially in this economy.
John: Our benefits aren't as good as Acme's, and I've heard a couple of people say they're waiting until Acme starts hiring again. At Acme they get 3 weeks vacation after 5 years of service and they get 2 extra floater holidays every year. Why don't we do that?
Roy: Most employees don't realize all the benefits they're getting. If they get laid off, they get unemployment benefits, our company pays half of their Social Security contribution every month, and we have a great retirement plan - with a good pension.
John: Yeah, I know, you're right that people don't realize how much money the company spends on their benefits. But every time I have somebody new (because somebody went over to Acme) production really suffers. Not only is the new person slow, but it takes somebody else's time to train them.
When it comes to attracting and keeping good employees, "show me the money". This week we will continue learning about "the money" with various approaches to variable compensation, executive compensation, pay for performance, and a wide range of benefits, some voluntary, some mandatory. If you have worked in an organization, much of this content will be familiar to you but you probably are not familiar with the underlying reasoning. While pay often is not the only reason people leave their jobs - or plan to leave -compensation that is competitive - or not - with the local market will always have an impact on an organization's turnover rate as well as worker morale .