Las Ferreterias de Mexico

Good management- Most of the Employees value reinforcers of opposite nature and they ar and so motivate by positive rewards. Employees are known to put less swither to those activities or tasks that are non well rewarded and hence in order to motivate them in their work, a good end for rewarding them is of the essence(p). These rewards are distinct in nature and involve remuneration, awards, off duties and many others. Mr. Gonzalez came up with the root of implementing compensation purpose as a way of improving carrying out of the employees in the company.His intention was to include coachs, buyers and salesmen in this unfermented compensation incentive. However, the consultancy firm found this to be difficult since it was ch entirelyenging to measure the action of the salesmen and buyers. The consultancy firm therefore advised Mr. Gonzalez to use the aim for managers of the companies further without including other staffs. The success of any throw or policy dep ends so much on the involvement of people who go forth be touch by that forge in its development.Employees will always gestate implementation of a plan they were gnarly in its development. For instance, considering their views earlier the development of the scheme will make them to own the plan and therefore support it when it comes to the implementation of the plan. This means that for the success of the new compensation plan, Mr. Gonzalez had to make sure that he involved either the parties who will be ventureed by the new plan. In the development of the new compensation schemes, Mr.Gonzalez want the services of the consultancy firm who worked together with the human resource and finance department representatives. The involvement of these two departments was key in order sway care of fiscal and human resource considerations during the plan implementation. However, the plan did non involve other staffs who were to be affected by the plan. This include managers from oth er departments such as computer memory managers and sales manager who were the benefici anyy of the new plan.This could make it difficulty for the company to implement the plan since there may be tradeoffs between the feat of the whole team and that of individual managers (Gerhart et al, 2009). During the development of the plan, it was necessary to take and consider the views of other managers and not just human resource and finance managers. This would have made the plan makers to consider all the issues like subsidy crime syndicate allocation, execution of instrument measures to be use and other important issues that may affect theimplementation of the plan. This would have ensured issues like how the incentive will be allocated among the managers. The plan allocated 70% of the indemnity to the store managers and the rest to bodied staffs and regional managers. Though, store managers perform a crucial role in sales, other department managers may not be comfortable with the way the bonus is allocated. The allocation of the bonus could have been agreed by all departmental managers before the implementation of the new plan.BONUS POOL ALLOCATIONAccording to the new compensation plan, the bonus pool would be allocated among store managers depending on the bonus units they have earned. A 5% earning in ROI would earn a store manager one unit of bonus. Any additional role earning in ROI would earn an additional bonus unit. This construction will continue to apply as the percent in ROI earning add-ons. The allocation will also put into consideration those store managers who have been in their federal agency for a period less than a year.The allocation of bonus among regional managers would be different where the manifestation used will consider the bonus unit that has been earned by stores in the managers region shared by all total unit bonus that have been earned by all stores in the company. Finally according to the new compensation plan, bonus po ol for the corporate staff would be dissever by the CEO, depending on the ROI requital of the heap in that year. The formula used in the compensation plan is very clear and simple hence understandable by all managers. A good bonus plan should be simple and clear to the parties who are affected by that plan.This would make it simple for those ships company affected by the plan to implement it. Clarity of the compensation plan means that the plan has lower-ranking or no ambiguity and un acceptedty about the standards that will be used to measure the performance of the beneficiaries. This means that the superiors are not in a position to enter any favourism or parti pris when measuring the performance of their subordinates. In this company, the formula applied is based on the allocation of bonus pool among the store managers according to the unit bonus they have earned relative to the ROI earning.The formula is simple and managers trick easily understand it and work hard to am plification their ROI earning in order for them to increase their bonus units. Again, the formula is immovable and it may not be possible for those people who will be assessing the performance of the managers to argue any bias or favouritism. This will ensure the efficiency of the compensation plan. This also applies to the formula used to calculate bonus for regional managers and corporate staffs. A good reward system should produce about impacts to the corporation.The system used should be aimed to improve the performance of the organisation after its implementation. Managers and other staffs ought to be motivated to work hard by the reward system as they strive to earn the promised bonus. Their increased performance will be reflected in the increased performance of the whole company. In addition, a good reward system ought to be timely where employees are rewarded immediately without any delay. This will motivate workers to work until now harder in the next period thus improv ing the performance of the corporation in the long border.THE PRINCIPLLE OF CONTROLLABILITYAccording to the dominatelability principle, all employees ought to be held accountable only when for those variables that are within their control (Giraud et al, 2008). Employees ought not to be penalized when things fail because of worst luck as well as not being rewarded when things succeed because of good luck. Thus managers should be held accountable for the outcomes of the variables they control. At managerial direct, many factors that affect the performance of an organisation are only partially controlled. However, managers are usually in a position to make decisions that may make the uncontrollable factors affect result in a positive way.The advantage of this method is that managers fecal matter be held accountable for the areas they are intended to influence. This will direct all the effort of the managers to the areas that can improve the performance of the organistion (profit centre). For instance, the compensation plan employed by Mr. Gonzalez will hold managers accountable for their profit centre.The main profit centre of the corporation are the stores thus basing the compensation plan of the managers on performance of this area will ensure that, managers effort are directed to the profit centre. Managers will also be more responsible since they will be accountable for all the factors they are controlling in the stores. However managers should also be rewarded for those factors they do not control and yet affect the outcome of their division outcome.BONUS DECISION ON CORPORATE PROFITThe new compensation plan is based on the ROI earnings at the end of financial year. The allocation of bonus among corporate staffs is based directly on the ROI earning of the corporate while among the managers it is indirectly based on ROI earnings. This means the bonus compensation plan may have impact on the corporate profit as it becomes expenses to the company.Increase d ROI does not necessarily translate to increased profit and therefore basing bonus compensation on ROI may debase the profit of the company due to increased expenses. The payment of all bonuses may be too expensive to the corporation thus reducing the profit of the organisation. However, this does not mean that the increased performance of the managers would not increase the profit of the corporation.QUESTION TWO CHALLENGES OF USING ROI Though the use of ROI to measure the performance of different division has a many advantages, it also has many disadvantages (Rachlin, 1997). Using this method to measure the performance of managers in the corporation may pose a number of challenges to Mr. Gonzales. According to Hoffman and Rogelberg (1998), the method may be referred to as a arbitrary system since it does not include all the staffs of the corporation. The plan only covers the managers and does not cover other players in profit generation such as salesmen and buyers.This means tha t the plan will not motivate all the workers together since it only covers some of them and not all of them. This will be difficult for all the employees to be united in order to achieve a common goal of improving performance of the organisation. change magnitude ROI earnings can only occurs when all the employees of the organisation combine their effort together to achieve a indisputable train of ROI earnings. This is not possible when all the staffs are not rewarded fairly for their effort.ROI performance measures show the ratio of the profit in relation to the investment used to generate it. This measure at quantify may be problematic for instance when it comes to the de destinationination of the investments that were used to generate a given level of profit. It is difficult to measure the amount of fixed asset that was used to generate a given level of profit. Mr. Gonzalez may find it difficult to relate the profit generated in a given store with fixed assets that were used to generate that profit. This because fixed assets will be used in more than one financial year.The use of ROI earnings to measure the performance of managers may lead to sub optimization where managers concentrate only on the ROI earnings of their division without necessary working to improve the performance of the whole corporation. Improving the ROI of a certain division is usually a short term goal which may not increase the performance of the organisation in the long term. Managers and other staffs may work very hard only for the purpose of earning the bonuses in the new compensation plan without necessary aiming to improve the performance of the company.The measure of earning on investments may also include those factors that are not controlled by the managers. This may include liabilities and assets that are not controlled by division managers and yet they affect the profit of a given store. Division managers usually control receivables and payments within that division and t hey should only be accountable for that. Holding division managers accountable for factors they do not control may be unfair to them. Thus Mr. Gonzalez ought to look for a method of measuring performance that will be fairer to all the managers.The use of ROI method may also create unhealthy emulation among the store managers. Bonus pool is allocated among store managers according to the percentage of ROI they have earned in their stores. The managers can therefore do anything possible to increase their ROI so that they can increase their bonus. This may involve manipulating their revenue and expenses in order to report high profit figures at the end of financial period. This behaviour will create unnecessary short term pressure among the managers which can be avoided using a different method of measuring the performance of the managers (Eva & Mika, 2010).This may have a negative impact to the long term performance of the company. Each division may also work more independent withou t co-working with other divisions since different divisions will be operating like rivals which may also not improve the long term performance of the company. It is also difficult to know whether the increase in sale in a certain store is as result of the new compensation plan (Sammer, 2006). It may take sometime before Mr. Gonzalez knows whether the implemented plan is successful.This is because there are other factors that are not controlled by the manager that may result in increased ROI earning. The use of the ROI method compare all managers on the same broadcast without considering differences in areas like their division, their region and many other differences. For instances, managers in different departments carry out different operations that have different expenses and revenues. These differences will also affect their department profitability and thus their earnings in ROI.Different regions also have different rate of sales and although efforts put by manager in that reg ion matters, regional differences will also affect the outcome of those regions. The use of ROI to measure the profitability of the manager does not put into consideration factors like regional differences which will affect the outcome of a certain region. Thus rewarding managers using ROI earnings which do not consider such factors will be unfair to some managers who may come from those regions that are not favourable.