Designing a compensation plan Suppose that you are the owner/manager of a house-cleaning business. You have 30 employees who work in teams of three. Teams are dispatched to the homes of customers where they are directed by the customer to undertake specific cleaning tasks that vary widely from customer to customer.
Your employees are unskilled workers who are paid an hourly wage of $9. This wage is typical for unskilled work. Turnover in your organization is quite high. Generally, your best employees leave as soon as they find better jobs. The employees that stay are usually ones who cannot find work elsewhere and have a poor attitude.
The hourly rate charged customers per team hour is $40. That is, if a team spends 1.5 hours in a customer’s home, the charge is $60.
You want to develop an incentive system to use in your organization.
You would like to use this incentive system to motivate good employees to stay and motivate poor workers either to improve or to leave. What type of system would you develop? If the system relies on any measurements, indicate how you would obtain these measurements.