Precision Manufacturing produces machine parts and has nearly 200 production emp

Question

Precision Manufacturing produces machine parts and has nearly 200 production employees and 50 employees in its front office with responsibilities ranging from data entry to marketing. Jackson Smith is the new compensation manager at Precision, and his first task is to implement a merit pay program that would tie to the company’s performance appraisal process. For the last 10 years, all employees have received an annual pay increase, but it has been an across-the-board increase, with all employees receiving the same percentage increase in base pay. Jackson and the company president have agreed that implementing a merit pay program to provide pay increases based on performance would support the company’s competitive strategy by rewarding employee productivity. The first step in developing the merit pay program is to ensure that the performance appraisal process aligns with the proposed program. The purpose of implementing the merit pay program is to provide employees with pay increases as a reward for performance, and, therefore, effective measurement of performance is essential. Jackson must now review the current appraisal process to ensure it will tie to the proposed merit pay program. The current appraisal process is fairly simple. Once each year, the supervisors at Precision provide their employees a written performance appraisal. The supervisors use a generic form to conduct their appraisals, and the same form is used for all employees. The form asks the supervisor to rate the employee on a scale of 1 to 5 in four areas: quantity of work, quality of work, attendance, and attitude. Once the form is completed, the supervisor meets with the employee to share the results. Both the supervisor and the employee sign the form, and then it is placed in the employee’s personnel file. Jackson’s initial research on the appraisals has brought several concerns to his attention. First, employees do not have written job descriptions that clearly state their performance expectations. Further, his review of past appraisals suggests that the supervisors tend to rate all of the employees about the same. Very rarely is an employee rated exceptionally high or low; most are rated as average. Finally, it seems that employees and supervisors communicate very little about performance. Aside from the one meeting a year to deliver the performance appraisal, the supervisors tend to talk to employees about their performance only if the employee is having a problem. Jackson knows he has a lot of work ahead of him to create a performance appraisal process that will provide a reliable assessment to support a merit pay program. First, he must clearly identify the problems with the current performance appraisal process, and then he must lay out a plan to correct any deficiencies. 3-6. What are some problems with Precision’s performance appraisal process that might cause challenges for Jackson to implement a merit pay program?

Explanation / Answer

answer --
STEP 1:
Precision manufacturing:
One of the most obvious reasons in coming up with a benefits package that makes sense for both the company and employees is to keep good workers from jumping ship as well as to attract new talent. Many small to midsize business owners mistakenly believe they cannot afford to offer quality benefits. But while going without a good benefits package may add to your bottom line in the short run, it could impede the future growth of your firm long term. Retaining and attracting top talent is key, especially in today’s environment where the need for highly skilled workers will help firms leverage the next revolution in manufacturing and the digitization of industrial processes (think additive manufacturing, for example). Candidates with the right skills can be more selective about where they work. This means that when it comes to securing qualified employees that are highly skilled, dedicated, and will bring strength to your shop, differentiating yourself from others is imperative to remain competitive. A strong benefits package will help to attract high-quality employees and can be a crucial factor for potential candidates in deciding whether to join a company.
Furthermore, there are certain benefits good employees feel they must have to join and stay with a firm. Topping the list of must-have benefits is health insurance, but many employees are looking for disability insurance, life insurance, retirement plans, and voluntary benefits that meet their specific needs. In providing employees the benefits they value, it only stands to reason that they will be more satisfied, miss fewer workdays, be less likely to quit, and have a higher commitment to meeting the company’s goals. In fact, research shows that when employees feel their benefits needs are satisfied, they’re more productive.
A well-designed benefits program doesn’t have to break the bank. Many employees to obtain the benefits they want are ready to put more skin in the game, especially for certain voluntary benefits. They understand that they’ll have to pay for some of what they’re getting. The key is to give them options that are meaningful, and to work with an employee benefits specialist in the manufacturing industry that can structure a plan that strikes the right balance between employee needs and a firm’s budgetary parameters.
STEP 2:
A merit pay is a program that utilized in rewarding employees depending on performance at the individual level. There are quite some conditions that need to be met for this technique to be practical and useful. One of the conditions is that managers need to have necessary tools that will help them in determining the appropriate rewards for the employees. Additionally, the variations that exist among the workforces need to measurable and should be measured before arriving at the compensation option. The current payment system Precision Manufacturing has used in for the last ten years is one of the reasons why Jackson Smith problems in implementing the new program. Firstly, there lacks an established or effective evaluation system to rate employees' performance. Since the current system increases the employees' salaries across-the-board, the supervisors executed a less thorough analysis of the workers' performance. The employees just filled a form that could help the directors in determining the quantity, quality, attitude and their attendance. However, as it can be seen, no individualized results was arrived at since all of them achieved average grades. No fixed system makes the performance of the employees measurable. Additionally, there is no mechanism at Precision Manufacturing used for differentiating the performance of individual employees since all staffs are judged on four parameters only.
A total of 250 employees will need to be evaluated differently. Though the company has supervisors, there are additional resources that will be required to provide individualized performance evaluation. The

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