Productivity and Cost Case Study Example | Topics and Well Written Essays - 750 words

Productivity and Cost - Case memorize ExampleGiven this basic economics law, companies must manage their resources effectively to create a more than productive environment given their resources. In this regard, I examined the strategical decision of Company ABC - atomic number 53 of the largest personal computers and laptop fictionrs in the world and how this strategic decision incorporate the law of diminishing borderline productivity and the relationship of productivity and cost.Recently, Company ABC revamped its fee and benefits program for its operations people. The new compensation and benefits program affects the salaries, wages and benefits of all production people - those employees who are directly involved in the manufacture and production of the fellowships products. The most prominent rescript in the companys compensation package is the awarding of incentive to a production teams productivity rather than on the individual team members performance. At the end of ea ch month, the teams existent productivity is measured and compared to the teams target productivity for the month, then the team is given a bonus base on how well they exceeded performance and then the team divides the bonus to its members. The division is equal. Say, the team bonus is for $ gravitational constant and there are 5 members in the team, then each one will get $cc as incentive bonus.By directly linking the individual employees incentive with that individuals teams productivity performance, Company ABC almost acknowledge that the individual has a little impact on productivity and that the teams effort has a oft more significant impact. Moreover, by putting the responsibility on productivity at the team level, the company is, in a sense, giving the responsibility to the team on how to fill up slacks in the team so its productivity does not suffer. This means that whenever a team member is absent, whether on throw a counsel or vacation leave, the team is responsible i n ensuring that the teams productivity does not suffer in injure of the absence.I think that the decision to link incentive and team productivity is a very crafty decision. The new incentive program allows the company a chance to increase its productivity without significantly increase the companys payroll expenses.Moreover, by putting the responsibility to monitor productivity at the team level, slackers or infra average employees will be pressured by the rest of the team to contribute more into the teams productivity efforts.However, fit in to the law of diminishing marginal productivity, the increase in the companys productivity as a result of the revision of the companys incentive program for its production employees will eventually diminishes. Hence, a new incentive program just is not enough to sustain the increase in productivity for a long time. Another strategic decision should accompany the revised incentive program.According to the neoclassical growth theory, the rea l GDP or pull in domestic product per person grows because technological change induces a level of saving ad investment that adjudge capital per hour of labor grow (CFA, 2008, p. 440). Hence, a revised incentive program and an introduction of a technological change in the companys production floor will go a long way in terms of Company ABCs productivity.Interview with several production managers and employees of Company ABC reveals that this is really what the company did and planned from the beginning. The company introduced its new incentive pro