Duplox Copiers Canada Limited is experiencing several severe issues that are affecting the profitability of the firm. The main issues at DCCL are: employee turnover is increasing, employee morale is low, and customer satisfaction has dropped while customer complaints have increased, and ultimately the biggest issue is revenue and profits have both decreased. From analyzing DCCL, it was determined that several strategic issues, including the current reward and compensation system, are having negative effects on employees, management, and the organization as a whole.
The first major issue that DCCL is facing is an increase in employee turnover, particularly with the TSS’s. Turnover rates are high and DCCL is finding it difficult to keep their TSS’s in particular. This, in turn, is affecting the company’s ability to train and have TSS’s gain a required level of experience. The success of Duplox depends highly on the motivation and quality of work that the TSSs do. Because the TSS’s are the face of the company and involved in both the install of equipment as well as the servicing up equipment, it is imperative that customers have good experiences with the TSS’s. This is currently not occurring for as displayed in several instances. To begin, the TSS’s are experiencing a decline in attitudes toward both their work and the company. Another major issue related to the TSS’s is that they seem to be struggling the most with maintaining a positive morale. TSS’s have little to no autonomy or ability to make any decisions on their own; everything is monitored and controlled by their supervisors. This is creating tension as they are being told what to do, even when company standards, such as safety, are not being met.
When the machines are installed but do not meet safety standards, the equipment is suffering and is leading to more required maintenance and service calls. Customers are dissatisfied with having unreliable machines and the downtime associated with waiting for the TSS’s to make their service calls and this is causing an increase in complaints. Due to the fact that the TSS’s are constantly the ones who are dealing with customers face to face, they are taking the majority of the complaints and are being blamed for the constant need of maintenance on equipment. This is one major reason why the TSS’s are dealing with low morale. However, the TSS’s are not at fault in terms of installations that are not meeting safety standards; this issue is originating with the sales people.
The sales people have a salary that only contributes to 50 % of their income, while the other 50 % is coming from how commission of sales. This is leading to the sales people forcing the closure of sales and not informing clients of safety standards that need to be changed prior to an installation. Compensation for TSS’s is also a factor that has become an issue for the organization. TSS’s are being given bonuses based on their productivity and their expense standards. Being given bonuses based on how efficient they are being in terms of their expense budget does not seem directly relatable to their job. Therefore, this is also causing tension and frustration for the TSS’s.
Evaluation of their performance needs to be objective and relatable to what they are doing out in the field in terms of installations and service calls. Most of these issues can be related to the managerial style that is being conducted at DCCL. There is very little opportunity for employees to be able to make their own decisions. The structure is set up in a classical managerial style which is very controlling. Many of the issues the organization is experiencing can be attributed to the style of management which is not facilitating a healthy work environment for employees.
We feel that the structure of the company is fine, but feel that the solutions lay in redefining the job descriptions and also reworking the compensation strategy to better reflect the goals of the company and how they expect to be successful. However, eliminating the FSM position will occur, because it creates many redundancies in how the TSS’s operate. Changing the compensation strategy of the sales reps is of the utmost importance, because as it stands, they are just pushing as many new installations as possible, since they are rewarded per number of installation. This means that some of the installations are occurring in places that do not conform to company standards on space, ventilation, and wiring. This is causing more and more breakdowns, which in turn leads to many more service calls for the TSSs. Another major issue that needs to change is the managerial style. Currently, DCCL is operating in a classical managerial style.
This has caused problems from poor communication, lack of motivation, low job satisfaction, and increased employee turnover rates. In order for DCCL to change their managerial style, they need to re-evaluate which style would work best. We believe that DCCL will excel with a shift to a human relations managerial style; this will allow for more autonomy and individual responsibility from employees, while still allowing managers to retain a level of control. Currently, managers are having to make every decisions and also supervise employees, such as the TSS’s, to an extreme degree. In order to have managers adopt a new managerial style focused more on human relations, a company meeting must be held.
In this meeting, the issues that have come from the current managerial style would be outlined and this would be followed by a proposition for change. With a new managerial style, employees such as the TSS’s may become more motivated as they will have more responsibility and autonomy to operate on their own. In order to allow the TSS’s to operate more efficiently and with more autonomy, eliminating the position of FSM seems the best choice. The FSM often just acts as a middleman, whether it be relaying on the message to order a part, or relaying on information from the Training/Support Specialist. As a result, job descriptions for Training/Support Specialist and also Branch Service Manager will be redesigned. Both revisions are as below:
Under the direction of the Director of Technical Training and Support, develops and conducts technical training programs for Technical Support Specialists for a given Model series. Provides direct support to Technical Service Specialists via telephone or email to deal with complex problems for this model series. Assists Sales Training Specialists in the Marketing Department with preparation of training materials and programs for sales representatives.
Branch Service Manager
Under the general supervision of the Regional Service Manager, manages the installation and servicing of company products at that branch. Supervises field service managers and ensures that budgeted service revenue and cost targets are achieved for the branch. Monitors TSS expense reports to ensure efficient travel and repair costs. Evaluates current policies, procedures, and practices for achieving regional objectives and implements improved policies, procedures, and practices. Responsible for selection, training, evaluation, coaching, promotion, transfer, or discharge of field service managers, technical service specialists, and service clerks. Supervises service clerks and, in conjunction with the Manager of Branch Inventories, the Branch Inventory Clerk. In conjunction with the Branch Sales Manager, oversees the administration of the branch.
The TSS’s are another point of concern, as many of the issues that are plaguing DCCL originate from these employees. However, it is not the fault of the TSS’s, but rather the structural system, combined with the job description and tasks given to the TSS’s. Having little to no ability to make their own decisions, the TSS’s have experienced a difficulty in staying motivated. Constant need to report to their supervisors makes it difficult for work to flow easily. Customers also focus their frustrations towards the TSS’s, as they are the ones who the customers see on a consistent basis. When new parts are needed to be ordered, the TSS’s must inform their supervisor so that they can order a new part, rather than just being able to place the order for the part themselves. The job description of the TSS’s will be revised as follows:
TSS 1 will perform routine product installations and product servicing for all products within the Model series (1000, 2000, 3000, or 4000). Assists TSS 2 and 3 in complex product installations, breakdowns and overhauls. Orders new parts for installations when required directly from the main warehouse. Effectively manage expenses regarding repairs and travel in accordance with company policies.
TSS 2 will perform complex product installations, repair of product breakdowns and malfunctions, and adjustment problems for all products in their model series (1000, 2000, 3000, or 4000). Supervises and trains TSS 1 in these functions and performs the initial on-the-job training for TSS 1 as required. Assists TSS 3 in major malfunctions and with major product overhauls. Effectively manage expenses regarding repairs and travel in accordance with company policies.
TSS 3 will perform complex product installations, repair of major product breakdowns and malfunctions, adjustment of complex quality problems, and complex overhauls for all products in their model series (1000, 2000, 3000, or 4000). Supervises and trains TSS 2 in these functions. With collaboration from the Field Services Manager, may assist sales representatives in identification of the technical configuration of equipment that best suits customer needs. Effectively manage expenses regarding repairs and travel in accordance with company policies.
In order to account for different desired behaviours for different positions, it is necessary to group different jobs in job families. When grouping the jobs, we assessed job descriptions to group jobs that have similar descriptions and tasks, require similar knowledge, and are at similar levels in the company. The following section outlines the Compensation Strategy Formulation Process. For each step in the process (required behaviour, role of compensation, compensation mix, and compensation level) we will outline how it will relate to each job family. Define the required Behaviour
The number one behavior that will help DCCL is task behavior, which is when employees perform the tasks that have been assigned to them. One of the main issues now is the disconnect between the sales people and the TSS’s. The sales people leave out important information, such as how crucial ventilation is to the machine, and as a result, the TSS’s are slammed with preventable service calls. The failure and breakdown rate caused by customers not being informed about what may be required to have the machine fit in their office. As a result, the breakdown and failure rate is higher than it should be, and is giving a bad reputation to the company. So by having more task behavior, the theories and rules, such as TSS’s refusing to do installs that do not meet specifications, or sales reps telling customers what alterations are necessary to have their machine perform optimally, even if it is a costly alteration. Compensation strategy will also influence a change in the Director’s and manager’s behaviour.
By changing their behaviour to citizen behaviour, more cooperation will occur between them and those working beneath them. Facilitating communication between positions will help DCCL become more productive. One way this will occur is that managers will work with the TSS’s, rather than commanding them on what they need to do. This will allow for opportunity to talk with one another on a more equal level and allow the TSS’s to voice concerns and communicate any ideas that they may have. Facilitators in the organization need to have membership behaviour and the compensation strategy will reflect this. Membership behaviour leads an employee to have a commitment to the organization allowing them to grow and prosper within that company. Having employees with membership behaviour also helps reduce turnover rates.
Define the role of Compensation
The role of compensation for DCCL will be to encourage employees to remain with the company, thus lowering the turnover. DCCL needs a compensation strategy that encourages employees to remain with the company, as turnover rates have been rising. It is expensive to replace employees, especially ones that require a great deal of training, like the TSS’s. Any facilitators as well need to be able to remain with the company, and may look for higher compensation. The employees, who have the ability to be trained and are hired with little required skill, can allow an organization to pay a lower compensation.
However, the required behaviour of a certain position can affect the level of compensation that an employee may be seeking, as motivational factors vary dependent on position. The salespeople are currently motived by a large compensation strategy that pays 50% of the salary and the rest is commissioned based. This is proving to be detrimental to the organization and must be adjusted so that these employees rely less on pure number of sales, this in turn allow them to make the proper sales to customers with environments that meet company specifications.
Determine the compensation mix
As behaviours and compensation are identified, a compensation mix of components will determine how effective the organization will be in eliciting behaviours in the most effective and efficient way. For the directors and managers, they will be compensated primarily on base pay. Performance pay will come from how well they are managing those beneath them, but will make up a smaller portion of their overall salary. The foundation for their base pay will be based on job evaluation as they are ones who have to ensure the organization is operating in an efficient manner. Director and managers will have the opportunity to receive benefits such as having a profit sharing incentive. Managers and other employees that are motivated by membership behaviour will have this option to have a share of the organization as their membership behaviour promotes commitment to the organization. The sales department are given a base pay based on job evaluation.
Since their duty is to increase sales for the organization, those who sell more should receive pay based on their performance. Also, their commission for each sale should be less than what it currently is as it is proving to be a point of concern as they are selling without regard to whether the sale is being done correctly. Any performance pay should be linked as a group because this will eliminate any sort of unhealthy competition and promote the sales team to work together and accomplish sales. Facilitator and Tech are all based on pay for knowledge. Their base pay will be compensated based on their expanse of knowledge and their ability to diagnose problems that others are unable to do. As mentioned, these employees need to have membership behaviour because it is difficult to hire a specialist with the required knowledge. The longer they are with the organization, the more valuable they become because they spend time learning and gaining experience. This allows them to have individual performance pay.
Determine the compensation level
Lagging, leading, or matching the market is the last step in determining compensation levels. For each job position there can be variation in terms of whether that position will lead, lag, or match the market. The directors and managers will be compensated at a level that is slightly above the market. In order to attract qualified and successful managers, offering above the market may attract those who feel they have an advantage in terms of their qualifications and are seeking something that compensates above average. Although it may cost the company more money, having a qualified and successful manager can improve an organization’s productivity which can be priceless.
The sales department will match the market at base pay, but they will have the opportunity to earn group performance pay that would be higher than the market. As for the Facilitators and Techs, they will be compensated above the market. Since the market that DCCL is operating in is very competitive, it is important to attract qualified and effective Facilitators to give the organization an advantage over competitors. By having a compensation level that pays above the market, Facilitators will want to work for DCCL and remain with DCCL, which helps in promoting the required membership behaviour.
From analyzing DCCL, we have concluded that the directors, managers, and the sales department all fall under the job evaluation system. For directors, there are a few compensable factors; education, experience, knowledge, mental effort, decision making, consequences of mistakes, supervisory responsibility, and employee relations. For education, a degree and business with a specialization of leadership and management or equivalent is desired as well as four years’ experience in a managerial or director role. They must have adequate knowledge of the industry from a previous position within the company or competitor is desired. The ability to make difficult decisions and not get stressed from the mental effort required. Able to handle the consequences and fix any mistakes made from a poor decision. Lastly, able to relate to employees while maintaining adequate supervisory responsibilities to ensure productivity, efficiency, and any safety issues as well.
Managers have similar compensable factors to that of directors. These factors are as follows: education, experience, mental effort, decision making, supervisory responsibility, employee relations, and knowledge. For education, a degree and business with a specialization of leadership and management or equivalent is desired as well as two years’ experience in a managerial or director role. Education must be a postsecondary degree with a specialization in management or human relations. Experience of two years in a managerial context is required as well. The ability to make decisions is essential and to make them with confidence. Must be able to manage and supervise employees with respect to garner cooperation and productivity.
Salespeople also fall under the job evaluation plan and their compensable factors are: human relations, friendliness, trustworthiness, interpersonal skills, communication skills, education, experience, and contact with customers and clients. Salespeople must have postsecondary education along with two years’ experience in sales of some sort. Being able to relate to customers and clients while maintaining a friendly outlook and to be seen as trustworthy is essential. Also, must have the ability to communicate fluently and clearly as well as have knowledge of a second language is desired.