McDowell’s Corporation: Designing an Incentive System Harvard Case Solution & Analysis

McDowell’s Corporation: Designing an Incentive System

Question 1

What factors should McDowell’s consider when designing a compensation plan for its first-line
managers?

Determining the right plan for compensating the employees of the senior manager of any company is a very crucial, complex and a subjective task. When the companies begin to determine the most attractive compensation plan, the employees of the company become more passionate about it. This is the same issue, which is being faced by the McDowell Corporation currently. From the point of view of the company, the management needs to compensate its first line managers strategically however, it seems that the management has failed to do so as a number of the compensation plans had been abandoned in the past(Schmidgall, 1993).

There are usually four policy choices that are considered by the restaurant firms and most of the other firms in other service industries before formulating a compensation strategy. These policies are management of the pay system, employee contributions, external competitiveness and internal alignment(Renn, 2001). Since, McDowell Corporation is currently expanding and the sales of the company have grown by an average rate of 11% from the level of sales last year, therefore, the best compensation strategy for McDowell Corporation for now would be to base the compensation on employee contributions through a range of factors.

The management visitation report could serve the purpose of measuring the quality of the services provided by the first line managers but it seems quite complex so a simple quality rating scale should be formulated on the basis of which each of the manager should be ranked in terms of Unsatisfactory, neutral or satisfactory........................

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