THE BEST-LAID INCENTIVE

PLANS

Submitted to, Submitted by,

Dr.Mausami Sen Gupta Mohammed Rayyan

Professor PGCM-2112

SDM-IMD SDM-IMD
 Rainbarrel before Hiram

Hiram’s vision
Case
Breakup The Backlash.

Issues to be resolved
Rainbarrel Before Hiram

Ten years of continuous growth due to good economic conditions

Company was “Fat and Happy”

Then came the economic slump and Rainbarrel could not cope with it.

They were slow to react due to their indiscipline and lax attitude.
 Hiram’s Vision
Focus on cost reduction via “Lean and Mean”.

He reduced labor cost by forced layoffs - 10% reduction in all units.

Improved call center metrics.

He brought in “Wall Of Shame”.

New metric of measuring customer service was brought in.

Hiram’s Vision Contd..

Standardized the meaning of the term ‘shipping’

Consideration of selling price as a measure of commission to sales people.

Removed the confusion in the minds of the sales personnel.

Bottomline - Keep things simple.

 Employee developed tendencies to find
loopholes.

Employees started filing patents which

were commercially non-viable.
The Backlash
The current and retired employees
were cold shouldered by the sales
people.

Layoffs were reducing happiness.

 The headcount reduction was the
target and not the cost.

Firing of low performing employees

was crippling the company.
Contd..
Even high performing department had
to lay of high performing individuals.

Long term customers were getting

disgruntled.
 Contd..

Customer service
Stuff was lying on the
Stocks were not getting personnel were in hurry
railroad siding outside
replenished. to hang up the phone
the warehouse.
calls from customers.

Hence multiple calls

In short, Hiram had lot
were required to resolve
of thinking to do.
a single issue.
Issues to • Make shipping efficient rather than
faster.
• Layoff increases costs of hiring too.

be • It is very difficult to define a right

metric.
• Compromising long term businesses for

resolved short term operating gains.

• PMS should be launched as a pilot .
 The employees were humiliated due to
Wall Of Shame

Introduction of intangible reward system.

Top performer need to be nurtured as

they are 50% more productive than other.
Contd..

The pay for performance was illogical

game.
THANK YOU