Alliston Instrument

Alliston is a Canadian maker of medical instruments. After a long period of monotony, the arrival of numerous players in the manufacture of Medical Instruments, mostly from Asia, means that competition was on the horizon for the firm. Since competition provides for substitute equipment with different pricing, Alliston was forced to examine manufacturing costs, which resulted in pay cuts and a reduction in staff capacity in order to stay afloat (Culbertson, Henning & Payne, 2013). This harmed quality because it resulted in a less engaged workforce in manufacturing as a result of the wage system implemented as part of affirmative action to reduce overall production costs.

Merit Plan that uses base Salary plus Group Incentive _x0096_ This is done with a basis of encouraging team work. Based on team performance, the team can reach out to achieve set goal and target within the group. As a result, each team member will try to pull the other to achievement of the team target.

Pay for Performance- Is one that Alliston can use to encourage individual performance within the company. This means that each person_x0092_s effort towards making the company succeed is welcomed and rewarded accordingly, based on company reward scheme.

Piece-mill pay - where staffs are brought on board to carry-out work as per client_x0092_s orders. Hence, they are working on call, leaving them to supplement their pay with other alternatives without being tied to a particular contract that is not remunerating as per their demands.

Pros

Employee Retention

The employees are well motivated meaning that they are able to serve the company for quiet a long term. Hence, the management is able to avoid the hustle of continuously recruitment and training due to high staff turnover (Mahajan, 2011).

Fair Treatment and Equity (Culbertson, Henning & Payne, 2013) - Through a proper remuneration package for Alliston Instruments, its employees feel that there is fairness on how they are treated. This helps in eliminating the staff attitude towards work

Reduced costs associated with high staff turnover is another positive of a better remuneration package that makes employees

Cons

Cost of production is high. This cost is usually borne by the customers. As a result, since the staffs are paid as per the work within a team, the high cost means that the company cannot produce more that what the market can take at a given timeframe (Dusterhoff, Cunningham, & MacGregor, 2014). This leaves gap in the overall sales meaning that the company can only sell few pieces which becomes unsustainable due to high staff capacity thus leading to lay-offs of staff.

Reduced Company_x0092_s Revenue. From the table, it is evident that the company sales is declining over the years, covering the period 2010-2013 sales, that has the revenue has slumped from all time high of $31,000,000 to 24,000,000, even with reduced no of staff from 320 to 293. The decline in sales is worry to the company.

Conflict of interest amongst employees. The increased input of pressure for employees to deliver has often caused them to go for older systems that are perceived to be lighter. As a result, it is perceived that the final outcome is over-relying on one line of production leaving the other departments pending. Dependence on bonuses by supervisors is another conflict area, thus creates a negative attitude towards work (Mahajan, 2011).

Demotivation: The group pay system often leaves employees demotivated along the process of working. Demotivation often leads to lack of commitment among employees. This is often translated in terms of areas of production. Demotivated employees in one way or another are often not concerned with the quality of production (Dusterhoff, Cunningham, & MacGregor, 2014); wastage of resources thus has an overall impact on the company_x0092_s sales and image.

Recommendation

Pay systems are best practiced in situation where all parties involved, for this case Alliston and the employees feel appreciated and benefit. The cases that come up include complain of too much work with limited or standardized pay. This makes the employed to work more hours with the same pay. In many cases, the employees have complained that the production process is too involving leaving little or no time to work overtime. As a motivation factor to employees, they feel that through being denied to be paid as per quantity of work done, it leaves gaps that the management is not willing to pay for.

References

Culbertson, S. S., Henning, J. B., & Payne, S. C. (2013). Performance appraisal satisfaction. Journal of Personnel Psychology.

Dusterhoff, C., Cunningham, J. B., & MacGregor, J. N. (2014). The effects of performance rating, leader_x0096_member exchange, perceived utility, and organizational justice on performance appraisal satisfaction: Applying a moral judgment perspective. Journal of Business Ethics, 119(2), 265-273.

Mahajan, A. (2011). Host country national’s reactions to expatriate pay policies: making a case for a cultural alignment pay model. The International Journal of Human Resource Management, 22(01), 121-137.