Issues and Reasons of low productivity Safelite was the largest nation-wide auto glass company in the United

States with about 500 stores, more than 3000 employees and 3000 trucks. The company has started mobile services and gained 12% o f market share. The low managers were given incentives to open as many stores as possible. Although Safelite offered mobile service from virtually all of its stores by the early 1990s, the main focus of the company was to serve the customers at their place and the trend of the stores was decreasing so forth. The incentive was $1000 to open a new store as bonus. So every employee tried to open a new store rather working hard and improve the production. The employees of the Safelite were required to work for eight hours and according to the CEO John Barlow, they were only putting in windshields for two and a half hours. They were not putting their complete efforts and loyalty to the company. Wasting their times and not working for what they were paid. The other reason of the low productivity was the popularity of mobile service which decreased the demand of the store-based services and the customers trend was changing to mobile service rather than store services. The other reasons includes the customer was not at the location where the mobile truck was called when the technician arrived or the technician was given the bad directions of the technician failed to understand the direction given by the customers. The employees didnt put their complete efforts to the work and they were not hard working. Another reason was the problem understanding of the customers. Many of the technicians were not able to understand the complete problem of the customers. They came to know the problem when they reached the customers place. Sometimes the technicians were not carrying their appropriate tools which were needed in the repairing for the customers. The mobile truck was liable to travel to the location where customer calls them. The reason of that was stores were not easy to find. It was because the stores were not well located; they were simply opened for the sake of adding more locations and were not always located in the prime service areas. John Barlow also added that if the location is not well located so why a customer bothers to find and go to the store. The fleet of the trucks became unable to justify its own cost. The company was seeing one repair job per truck per day to be maintained but they thought that this is a little expense. Individual technicians were installing an average of only 2.5 glass unit a day. It was the very bad performance than that of they had expected. Since the installation of a single windshield generally took less than an hour to complete. The poor performance of the

employees was not tolerated by the management so they started thinking something else for the stores and production.

Role of Performance Pay Plan (PPP) There were two goals of the Safelite were to create the loyalty among its large workforce and against the traditional high turnover rate of the employees. It was due to the seasonal business of the company. The summer and spring season was intended to be the most busy months for the windshields and repairs. These months were the most competitive and tough enough for new hires. The recruiting was at peak in these months due to the large demand of the workforce. But in winter the demand of windshield replacement was not that as compared to summer months. So repair shops were often found eliminating their employees for the current season due to low demand and to retain them back in the summer and spring season when the demand raises again. The trend of suspension of employees for short time was is seen in the safelite. The company is simply engaged to increase their profit and the turnover was not concerned because of off season. The employees were required to make and install the pieces at their own convenience but the payment would be paid at their actual performance. The old method of the pay structure was not efficient as seen by the management. The employees were not participating a loyal role to the company. They were wasting the time and were not performing their tasks given to them. This increases the core problems of the company low productivity as well as the turnover which was due to either the employees turnover or layoff of employees due to low productivity or excess labor.

Benefits of Piece rate pay As the performance of employees was un satisfactory as expected by the company. The wage criteria was changed to wage rate to piece rate. It caused too critical problems for the management and for the employees too. The employees who were not working upto the mark were tend to perform their work efficiently and effectively. It seemed good for the company because the employee who were not working upto the mark were not paid more than that they

worked. For example as CEO said that the installers and technicians worked for two and a half hours and the rest of the time they were doing nothing but wasting time and the money of the company. Moreover the policy which made every employee motivated to earn bonuses was also the drawback of low productivity. The production was low already but the employees were paid the complete wage. So when the piece rate pay was introduced the employees had to work hard and be loyal to the company to earn more wage. The more they install or produce the more they earn.

Outcomes of the Piece Rate Pay The other trend of opening the new store would also be declined due to piece rate pay. The employees were seeking $1000 per store to earn rather that of production and installation which was the core objectives of the employees. If the employees run before opening the new store and do not perform his given task he would be only paid the bonus. This would make the employee as the short term employee of the company and will not be able to be with company for the longer period of time. The other outcome of this plan is that company will pay less to in efficient employees who do not finish or perform at the given time. The saving of money would be made by this plan. It is because the employees who are not working complete eight hours would not be paid the fixed wage and it would be beneficial for the company profit. The thing which is not reliable for the company would be the loss of the employees. The employees who are the core assets of the business would be lost when desired wage is not given to them they might leave the jobs and some time it would not be good for the company and it might cause the problem in the processes of the productions.

Commenting on wage plan The turnover of the employees would be affected by wage per piece seriously. It would result the increasing turnover of the employees due to decrease in the efficiency. The more the employees would be forced to work for the customers satisfaction and working in accordance of the required need. And if the employees would work in accordance with the companys policies the

company would be so lucky to have such employees. The production and the profit of the company would be increased within no time. The product quality would be decreased with this plan. It is due to the motivation of the employees towards their work. The employees would put their every effort to their work to make more and more pieces to produce more pieces so that the maximum pay could be earned. Whenever the production is increased it is obvious that the quality of the work and production would be decreased upto a certain level. The recruitment of the new employees would be offered very sooner. It is due to the turnover rate as well as the employee lay off due to the seasonal business. First of all when the pay plan is set as per piece base it would dismiss few employees because they would not be able to achieve the required goal of each employee. Secondly if the person is producing less pieces due to his inefficiency might be the person would think of joining any other company which pays fixed pay which would be suitable for those people. The holidays and special leaves would perform the bad impact to the employees. It is because of the piece pay plan. When the employees are on leave they would not be able to get rewards and it would be a cause of de motivation and then turnover. The recruitment of the employees would be made possible in piece pay plan. When the employee is dismissed or laid off from the company there is the need of new employees who could perform the task effectively and efficiently as needed by the company operations. So the more expenses would be bear by the management in training the employees to train them according to their needs. But if the old employees are not laid off then the new hiring and the new selection of the new employees would not be made. The new hiring would be halted and new techniques and talent would not be experienced by the company. The productivity would be certainly increased because of through work of the employees. The quality might not meet the standards to the quality standards of the company but the goal and the requirement of production would be met. The employees would be looking for more production to gain more payment so the productivity would be increased.

Recommendations The company should retain the performance pay plan in the local employees which are to be hired. But they should pay guaranteed wages to the employees who are from abroad if the company has foreign employees. Mostly the foreign employees are more talented and are

brought up to the company to increase the profit or to reduce the cost. Mostly these employees and the labor is cheap and beneficial for the company. Safelite should make a quality standard and a quality control department which would certainly increase the productivity as well as the quality of the production of the employees. It is due to the increasing trend of the production due to the piece pay plan which certainly decreases the quality. So if the quality standard and quality check control is made it would increase production as well as quality too. Safelite should increase the wage of the employees too. If they made quality standards or quality control department it would creat conflicts between the management and the employees. So when the pay would be increased the motivation would be increased of the employees too. Both employees as well as the companys motive would be taken side by side. The operations of the production should be changed about to some extent. The union trend should be encouraged so that the labor problems and needs should be delivered to the management so that the chances of the ambiguity should be minimized. One union leader could meet the top management or concerned officer to remove the conflicts and the work should be done appropriately. The trend of mobile service should be maintained but the store services should be encouraged by the management. The locations of the stores should be changed to prime areas so that the customers could easily find the stores.

Executive Summary This case Performance Pay at Safelite Auto Glass is an interesting case. The company is the nation-wide largest auto glass company in the United States. Some problems arose which brought up the conflicts between the employees which in result lower the production of the company. The turnover rate was also analyzed due to the Performance Pay plan and due to the nature of the business. The quality standard and the work standard should be introduced in the company to maintain the standards of the production and work force. The location should be reset in according to regain the lost customers which would be certainly very beneficial for the company.