Assignment: Group C, Case 8-2, "Galt Contracting" on p. 269
1. What are the advantages and disadvantages of paying tree planters on a piece-rate system? On a flat-rate system?
PIECE RATE SYSTEM
Creates friendly competition among workers to see who can be the most productive.
Pays based more so on effort - low production equals low earnings
Reduces socializing during work hours
Increases the amount of potential earnings for each employee
Helps in recruitment / retention of employees - good earning potential is key to a university student who has limited time to earn money for the next school year.
Creates a system where quality if forsaken for quantity
Not always fair based on tree spacing requirements, or type of terrain being covered
Could potentially cost Galt Contracting their business as this system may lead to a bad name within the industry.
Could lead to HR violations as employees are rewarded for skipping all types of breaks / working very long hours in the name of getting a higher plant count.
Higher incidents of poor planting requires more attention from Donald who much consistently check on their work for the sake of his company’s good name
Could cost Galt Contracting a lot of money as they are paying for the supplies and labor only to have the planted tree not live.
FLAT RATE SYSTEM
May reward quality of work over quantity planted among employees
Would be “fairer” in very difficult terrain, or in situations where the planting spread is larger (a 4.1 for example)
Allows employees to have a better idea what they will earn for a given period
Potentially could lower the companies wages
Could be instrumental in helping the company keep and develop a good name with lumber companies with quality of work
Could improve employee working conditions - coffee breaks, lunch breaks etc.
Decreased productivity from planters
Potential recruitment / retention problems as...