TABLE OF CONTENTS
Management issues .................................................................................................... 2
Suggestions for management issues ........................................................................... 5
References ................................................................................................................. 9

MANAGEMENT ISSUES
The management issues faced by Blue Flowers (Pvt) Ltd are,
1) The organizational incentive system is not aligned with corporate vision
The company vision is “to be a leading manufacturer of world class quality artificial flowers in South Asia by year 2020”.To attain this vision they company have been flowing with steady import orders. To fulfill these buyers’ needs company has to increase the production. While increasing the production suddenly in a larger amount company should guide and motivate the employees to achieve those targets. An effective incentive scheme helps to hit the targets on time. But in this company the incentive scheme is not considered about the company vision and it is not properly planned. It has created troubles for company as well as the employees. The vision emphasis the quality of the products, but currently the company has a highest defect rate about 10-15% after introducing the incentive scheme. 2) No proper coordination among departments
Production department complained to other departments that due to their faults they couldn’t hit the targets and defect rate is increased. If the departments have a proper coordination about those activities and tasks they did not face problems.
This is a barrier to smooth functioning of the company.

3) Incentive scheme is not properly communicated to the employees
The content, objectives and the benefits of the incentive scheme should be clearly communicated to the employees. Because of this company located in a remote area and about 350 workforces in this company. Other than top management the others may be lower end workers. The understanding of those technical words, formulas, systems and English knowledge of those workers may be problematic.
Before implement the incentive scheme should consult with staff and trade unions. But this company planned and implemented the system as their willingness. Because of this trade unions actions were arose and workers viewed that this is not an incentive scheme but just another way of exploiting labor.

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4) Incentive scheme is not differentiated
Company has paid same incentives for the all departments. The lower end workers are not reaping any benefits of this incentive scheme and other department people (Purchasing, accounts, sales and HR) have enjoyed more of this. Incentives are a performance based pay. But those who contributed more
(Production department employees) have not been treated well. This was not emphasis the just and equitability.

5) Incentives are not paid on time
Incentive scheme should be considered about the time between results and rewards. Company should reward employees once the agreed targets are met. But in this company employees complained that accounts department not pays the incentives on time.

6) After an incentive program was introduced the production rates has been gradually increased to some extent (32%) and again has felt down (20%)
Top management was unable to get expected output from the incentive scheme.
The production rates of the first 3 months were gradually increased, but the 4 th month onwards it has been came down.
1st month – 20%
2nd month – 30%

+ 12%

3rd month – 32%
4th month – 28%
5th month – 20%

- 12%

6th month – 20%

7) Superior bias on some employees
As per employees’ complaint the supervisors are branding the products as rejected or low quality purposely. This leads to performance feedback errors and because of this cannot reward for the better performance. Biasness leads to frustration among other employees and they will be demotivated and finally effect on lower quality and productivity.

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8) It is not conducive to employees health
Workers complained that some managers and supervisors consider workers as machines and expect that level of constant uninterrupted work. An incentive scheme should not be harmful to health of employees. But here employees did not have interval between working hours and it was too hard to employees to perform.
This leads to lower productivity.

9) Increased the lower quality of production and rejects rate
After implementing the incentive scheme the rejects rate has increased by about
10-15%. Unable to meet expected quality level is a greater problem to achieve the goal and it is more cost effective.

10) No proper grievance handling procedure
There was no effective grievances procedure and that is why employees went through the union actions even for small problems. Some union action have been taken by asking reduce the targets to a 30% increase, instead of incentive increase the basic salary by Rs.2000, to have a maximum of 2 hours over time per day.

11) No regularly review of scheme and not obtain feedback
Managements evaluated the progression after 6 months of implementing the incentive scheme. Not having regular evaluating process cause to arise more defects and issues.

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SUGGESTIONS FOR MANAGEMENT ISSUES
The suggestions to overcome those issues are,
1) Establish an effective coordination among departments
Effective coordination among departments is most important to achieve targets because all the departments are interrelated and interdependent. This can be done by establishing proper inter department communication system. On the other hand, company can be arranged seminars, workshops, outbound training programs and get together parties to ensure effective coordination.

2) Conduct a work study
Trade union requested to reduce the target up to 30%. But before reduce the target company can check whether the existing target can be achieved or not. For this, top management have to have a thorough knowledge about how works to be done and what are the best methods to perform the tasks. So that management can set the goals for individuals, departments and for the organization.

3) Establish attainable standards
The trade union requested to reduce the target up to 30% because of they face difficulties when hitting 40% target. Management can be established attainable target by conducting a survey and/or by discussing production and industrial engineering department.

4) Incentive scheme properly communicate to the employees
The purpose and the content of the incentive scheme should properly communicate. This can be done through immediate supervisors of the employees and can be noticed on employees’ notice boards. As well as it is necessary to communicate benefits of the incentive awards to employees and their contribution to organizational success.

5) Incentive scheme should ensure employee health
In addition to meal hour it can be introduced intervals between working hours.
Five or ten minutes per 2 hours like that. Also company can play songs to relax employees’ mind
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6) Consult with staff and trade union
The management can be asked to take part for all parties (at least one representative from each department) to get suggestions to correct issues. By this program all level of employees should be covered. Company can arrange meeting and discuss what can be done to solve those issues. Trade union has brought some idea, so company can consider about those suggestions and bargain with them.

7) Existing incentive scheme can be adjusted
Current incentive scheme is same for the all departments. To avoid the problem of other people benefit more than people who perform well, company can be adjusted the scheme.
It can be granted more incentives for the production department because their contribution and work load is higher than other departments. Also to reduce reject rate the company can be introduced incentive scheme for quality department. Current reject rate is 15% and company can say employee who reduces the reject rates up to these percentages will be rewarded. It can be shown as follows,
Reject rate

Incentive

9% - 6%

Rs. 1500

5.99% - 3%

Rs. 2500

2.99 - 1%

Rs. 4000

Current wastage is higher. So, by reducing current wastage and it can be used as incentives. Therefore, do not need to ask resources or money from outside.

8) Establish better work climate
Better employer employee relationship is crucial to perform effectively. This can be done through having trips, sport meets and etc. Management should talk with employees in a friendly manner and supervisors and the management must treat employees well, be sensitive in some cases, and not overload the workers with much work.

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9) Incentive scheme conduct in a fair and equitable manner
Always top management has responsible for making a fair/equitable incentive scheme. That means it should treat every employees in the same manner, it does not imply that well performers and under performers (“c players”) should be treated by the same rates under the incentive scheme. Management can train supervisors about how to give the feedback and how to conduct the appraisals effectively. 10) Establish an effective grievance handling procedure
It is better to assign a person to handle the grievances in each department. Using such method they can reduce some of grievances coming from employees. This will reduce the trade union involvements.

11) Pay incentives on time
Top management can direct to the accounts department to keep a fixed date to pay for the incentives. For instance 10th of every month employees should be beneficial with the incentives.

12) Regular review the scheme and give feedback
Document, communicate and obtain feedback from staff at all times is crucial for an effective incentive scheme.

13) Introduce employee appreciation programs specially related with incentive scheme To enhance the employee morale it can be conducted a workers’ day in every month. This company located in a remote area and people from this kind of area will be motivated through this kind of activities. On this day, company can select and appreciate the best employee of the month, best team that achieved the target and best efficiency. This can be celebrated as a ceremony and parents of the employees can be invited. While appreciate employees in front of their parents, relatives or friends they will be happy and this happiness leads to perform well.

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14) Identify the training and development needs
Identify the training and development needs of the employees and should take steps to correct them. It’s one of the major responsibility of line manager/supervisor to identify the under performers and put them into training and development programs. Then the effectiveness and the wastage can be reduced. 15) Keep the incentive scheme simple
The calculations, performance measurements and standards should be easy to understand. The easier it is for employees to know how they can be rewarded, the more likely they will buy into the incentive system.

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REFERENCES
Bohlander, G., & Snell, S. (2013). Principles of human resource Management (16th ed.). http://www.incentivemag.com/Strategy/Ask-the-Experts/Roy-Saunderson/Top-10Ways-to-Improve-Your-Incentive-Programs/
Lecture materials provided by the IPM (compensation management)

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