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Case study-Reward System
Human Resources » HR Metrics & Measurement

Chrm Message From: kanudhiman Total Posts: 4 Join Date: 25/02/2010
Rank: Beginner Post Date: 03/03/2010 09:55:11 Points: 20 Location: India
Case Study - Reward System

Star automobiles ltd. Pimpary is in the field of manufacture of two wheelers. They manufacture and market mopeds. These are available in the brand names 'arrow' and 'double arrow' where 'arrow' is their traditional product and 'double arrow' is the improved version.

The company was started about 20 yrs ago. Their product 'arrow' enjoys a reasonably good reputation and they were comfortable in the market. However, with the entry of the new generation of fuel-efficient mopeds the company started loosing its market.

They immediately started developing the improved 'double arrow' but by the time they came out with this new model the competitors had already strengthened their position in the market.

The 'arrow' model was still acceptable by a segment of the market as it was the cheapest vehicle. 'Double arrow' is a new generation vehicle. It was costlier than Jet but its performance was much superior. It is compared favorably with the competitors' products; however it was yet to gain a foot hold in the market.

The company had to refurbish the marketing activities in order to get back their market share. They employed young sales engineers to launch a strong sales drive. Mr. Ramesh Tiwari, Btech and a diploma holder in marketing got selected and was put on the job.

Mr. Ramesh Tiwari started well in his new job. He was given a territory to contact the prospective customers and to book the orders. The company had introduced a new financial assistance scheme. Under this scheme, buyers were given easy loans. It was particularly advantageous for group booking by employees working in an organization.

Mr. Ramesh Tiwari was able to contact people in different organizations, arrange for group bookings and facilitate the loans. His performance was good in the first year and in the second year of his service.
The company had its own system of rewarding those whose performance happened to be good. They usually arranged a paid holiday trip for the good performer along with his wife. Mr. Ramesh Tiwari was accordingly informed by the marketing manager to go to Chennai with his wife on company expenses. Mr. Ramesh Tiwari asked him as to how much it would cost to the company. The marketing manager calculated and told him that it would cost about 8000/-. He quickly asked him whether he could get that 8000/- in cash instead of the trip as he had better plans. The marketing manager countered this saying that it might not be possible to do so. It was not the trading of the company, however he would check with the personnel manager.

After a couple of days, Mr. Tiwari was informed that it would not be possible to give him a cash reward. Mr. Tiwari grudgingly went for the trip and returned. On his return, he was heard complaining to one of his colleagues his little daughter was also along with him.

The marketing manager and the personnel manager thought he was a bit too fussy about the money and some of his colleagues also thought so. During the subsequent days Mr Ramesh Tiwari's performance was not all that satisfactory which showed his lukewarm attitude towards his job and the subordinates.

1. Where did the things go wrong?
2. Was Mr. Ramesh Tiwari too much money minded?
3. Was the company too bureaucratic?
4. Did the personnel manager handle the issue properly?
5. What is your recommendation to avoid such situations in future?
Chrm Message From: Jyoti Rani Total Posts: 67 Join Date: 25/02/2010  
Rank: Manager Post Date: 04/03/2010 05:18:34 Points: 335 Location: India
Hi, my thoughts for these questions of case study,

1. Where did the things go wrong?

 Correct approach of motivation to employees are very important.

2. Was Mr. Ramesh Tiwari too much money minded?

 Money is a prime attraction while you earn, specifically at the initial stage of career, therefore the bent of mind towards money is quite usual and natural

3. Was the company too bureaucratic?

Company was rigid, could have provided some options in terms of trip locations.

4. Did the personnel manager handle the issue properly?

No not at all, atleast he would have given a thought over the scheme/plan and tried to find out some options, retaining the good performers are also very important.

5. What is your recommendation to avoid such situations in future?

At the time of joining clear indications on benefits/bonus to be briefed for the Sales team, as a company more flexible and executable kind of plans should be worked out as its very important to keep the sales team motivated and peped up.
Chrm Message From: mshivkumar Total Posts: 3 Join Date: 25/02/2010  
Rank: Beginner Post Date: 11/05/2010 05:30:29 Points: 15 Location: India

Firstly, every individual wishes to be recognized in a manner that he/she deems encouraging. While I understand that this might not be feasible in a big organization, however, two people are responsible to ensure that the reward system is in line with what the employees in the organization consider worthwhile.

In this particular case, the supervisor and the HR manager was expected to find out as to what why the employee wanted the reward in cash and then post meeting with him the appropriate solution should have been provided.

R&R is designed to encourage employees and not become counter productive. Another thing that I have noted a few companies adopt is the system of a single R&R methodology, this in many cases becomes counter productive. Organization should always ensure that within the given budget multiple options should be provided to the employees. I have seen many successful companies adopt a point system which translates into cash and the employee is provided a list of options to choose from and the policy around R&R is clear in those terms. This kind of system ensures that the employee has options yet has to choose from within the boundary.

I do not believe that the employee in the below case is money minded, it is a simple case wherein the R&R philosophy of the organization does not match his philosophy of recognition. It is a case of clear case of R&R philosophy conflict.

Another thing, that i have observed is the HR managers tend to blindly copy the so called 'best practices' from different organisation and paste it in their organization without actually realising that every company has a different culture and one stroke does not work for all. Hence, one should ensure that the employees are involved in the R&R philosophy formulation as it is for them and not for the HR manager or the leadership. It is mostly the employees at the base of the pyramid who are impacted and we should emsure that they gain maximum from this.




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