Vita-def Ltd is a pharmaceuticals company. In the past, research scientists work
ID: 2406830 • Letter: V
Question
Vita-def Ltd is a pharmaceuticals company. In the past, research scientists working at Vita- def have been rewarded based on their proven scientific expertise. Salaries of these scientists are based on their educational qualifications and the number of research papers published in scientific journals. Recently, an outside director made the following criticism |"We have the most highly trained scientists in our industry. Evidence of their training and creativity is provided by the number of research publications they generate. However, the knowledge and creativity are not translating into patentable inventions and increased sales for this company. Our organisation has the lowest rate of new product introduction in our industry, and we have one of the largest research and development teams. These people are too concerned with getting articles published. We need these people to have more interest in generating ideas that have commercial potential.This is a profit-seeking organisation, not a university research laboratory." Required: 1. The board of directors has ordered the president of Vita-def to increase the rate of successful new products developed, and the time devoted to new product development Suggest a specific compensation scheme for the research scientists that would address the directors' concerns, using expectancy theory to inform your answer. (6 marks)Explanation / Answer
Exectancy Theory is based on the assumption that behaviour results from conscious choices among alternatives whose purpose it to maximise pleasure and to minimise pain.The variables used in the theory are
1. Expectancy - belief that increased effort will lead to increased performance.
2.Instrumentality - belief that if you perform well that a valued outcome will happen
3. Valence - importance that individual places on the expected outcome
Based on the above the 3 variables the director has to come with a compensation scheme that will maximise the pleasure of the scientists while minimizing the pain.
The director has to design the package so that the scienists will increase the number of hours they put in for the new prodcut development. The package should be linked to the number of new products the scientist would come up with. Also he should link it the sale of the newly innovated prodcuts. the scientists should be compensated based on the following:
1. Number of new products innovated
2. Number of hours put in towards innovation
3. Volume and amount of sale of the new innovative products
4. Profitablity of the new products.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.