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    Suggestion System, Cost Reduction vs. Profit Sharing

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    Question #1
    The suggestion system has been a major element in any employer plan to encourage greater employee involvement. What are the factors that failed many systems?

    Question # 2
    What are the major differences between the cost-reduction and profit-sharing program? What are the philosophic issues underlying each type of program? Provide examples of each but not examples you find in the textbook. Tell me in your own words using your examples. Which is the most appealing to you and why?

    The book I am using is:
    Compensation Management in a Knowledge -Based World (10th Ed.) Richard I. Henderson

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    Solution Preview

    Suggestion system fails due to numerous reasons. First of all, lack of support from the management is a major cause of failure for the system. Another cause of failure is lack of proper administration of the system and weaknesses in structure, procedures and processes. Employees often lack to understand the objectives and goals of the system and thus, do not participate in the system with full interest and enthusiasm. Lack of effective rewards and recognition is also a major cause of failure of the system. Suggestion system can also fail if employees do not find the system fair and consider it biased towards certain employees. In order to reap the ...

    Solution Summary

    The solution gives a 432-word explanation of the suggestion system of a company and the major differences between the cost-reduction and profit-sharing programs.