What type of compensation approach is Gore using to be externally competitive?

Posted: July 12th, 2022

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use the APA format as a guideline
Include two references for full credit. One can be the text and the other should be information regarding the company in the scenario or a scholarly article on the main topic for the case or critical thinking activity.
All questions answered and addressed
Answers indicate that symptoms were recognized
Actual causes of the problem were uncovered
Answers indicate that you identified major goals of the organizations, units, and/or individuals in the case
Answers indicate that longer-term performance problems and those requiring immediate attention have been recognized and considered
Identified appropriate alternative actions
Case Study 1: Compensation at W.L. Gore
W.L. Gore & Associates is a company well known for its GORE-TEX fabric for protective outerwear. The company was included on Fortune’s “100 Best Companies to Work For” list for 20 consecutive years. Gore has received numerous other recognitions as well, including being ranked number 15 on the 2017 World’s Best Multinational Workplaces list by the Great Place to Work Institute, was named a best workplace in France, Germany, Italy, Korea, Sweden, the United Kingdom, and China, and frequently used as an example of a company that is innovative. Rather than job titles, bosses, and organization charts, Gore uses a team approach, with leaders, sponsors, and team members.
The main objective of Gore’s compensation plan is to ensure that employees, referred to as associates, are paid for their contributions to the success of the company. Their compensation plan is focused on both internal fairness and external competitiveness. Gore uses two approaches to achieve these goals. The first is straightforward and typically used by companies: comparing pay at Gore with pay for comparable jobs at other companies. In other words, Gore does a lot of benchmarking to be sure their salaries are competitive with the relevant labor markets. That takes care of the external competitiveness part.
The internal competitiveness part is what is different at Gore. The process works like this: Associates on the same team rank each other based on contributions to the company for the year. Team members provide a numerical ranking and can provide comments to support their rankings and identify strengths or areas for improvement of the associates they rank. This information is then used for determining raises.
Questions
What type of compensation approach is Gore using to be externally competitive? What are the pluses and minuses of this approach?
Discuss the pros and cons of the internal competitiveness strategy at Gore.
Do you think that Gore can achieve its goals of internal fairness and external competitiveness with the two approaches used?
Would you want to work for this company? Why or why not?
Case Study 2: A New Incentive System at Lane Automotive
You’ve been hired by Lane Automotive, a relatively large local automobile dealer to design a new compensation and incentive system for several positions that make up the bulk of the firm’s workforce. These positions are:
15 administrative positions: These positions involve the day-to-day operational facets of running the dealership—answering phones, working at the customer service desk, filing paperwork, pulling records on cars, and so forth. These employees are currently paid on an hourly basis. The turnover rate is about 35% for these positions. There have been several complaints about the courtesy and helpfulness of employees occupying these positions. Currently, these employees receive annual bonuses if the dealership exceeds its goals and merit pay increases once each year.
15 sales positions: The employees occupying these positions are primarily focused on selling cars and are paid entirely on commission. The turnover among these employees is high (about 80% leave each year), although a few of the sales staff have been with the dealership for a number of years.
17 service positions (mechanics): The mechanics occupying these positions are paid on a standard hour plan (i.e., their pay is based on how much time it should take to perform each repair). These employees regularly repair cars in less time than allowed under the standard hour plan. The turnover among these employees is very low. As in any other dealership, there have been some complaints about the quality of the service the firm’s mechanics have delivered. A number of customers have had to bring their vehicles in several times before their auto problems were properly repaired.
The goals of the dealership are primarily to make money on the sale of new and used cars, but most of the money is made through the service department. There are several challenges you must consider before you make your recommendations:
The dealership’s profitability is fundamentally influenced by the number of cars service and the quality of that service. In addition, the dealership’s profitability is enhanced by (1) repeat business and (2) the company’s reputation. Historically, repeat customers represent a sizable amount of business; the dealership gets to sell their used cars they traded in and sells them new cars. Moreover, customer loyalty matters a lot because word-of-mouth advertising generates business.
Service quality in terms of the sales process, as well as the service department (mechanics), is a critical component of customer satisfaction and affects the amount of repeat business.
The income salespeople earn is directly related to the profitability of each car they sell. The prices on the cars are somewhat negotiable. Under the current system, the sales staff and the dealership split the profits from every transaction 50-50.
Questions
What are the major problems that exist in this case?
For each problem you have identified, explain how incentive may be a contributing factor to the problem or a solution to the problem.
What changes would you make to the incentive system in place for these three groups of employees?

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