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Howe 2 Ski Compensation/Merit Based Plan

Summer 2011 - Compensation Exercise

1. What was the problem with the merit-based pay plan that Howe 2 Ski Stores was
using?

2. What alternative compensation plan would you recommend (i.e., gainsharing, profit sharing, ownership, incentives, balanced scorecard, etc.) to help solve these issues? Please be specific about how this plan will be implemented.

3. What are the advantages of your new plan?

4. What disadvantages are there to your new plan?

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Summer 2011 - Compensation Exercise

1. What was the problem with the merit-based pay plan that Howe 2 Ski Stores was
using?
The problem with the merit based pay plan was that it singled out a particular department (thus being unfair to rest of employees), was not closely monitored, caused discontent among all, and most importantly did not increase long term performance for the molders. In addition, it caused further unhappiness and service issues.

2. What alternative compensation plan would you recommend (i.e., gainsharing, profit sharing, ownership, incentives, balanced scorecard, etc.) to help solve these issues? Please be specific about how this plan will be implemented.

I would suggest a profit sharing plan in which five or ten percent of the individual store's profit is rebated back to all employees. ...

Solution Summary

This solution discusses a case study involving Howe 2 Ski Stores and their merit based pay plan. It suggests an alternative compensation plan, its' implementation, advantages and disadvantages. It includes examples.

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