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

Productivity and Cost - Case Study ExampleGiven this basic economics law, companies mustiness manage their resources effectively to create a more productive environment given their resources. In this regard, I examined the strategical decision of Company first principle - oneness of the largest personal computers and laptop pay offrs in the world and how this strategic decision incorporate the law of diminishing marginal productivity and the relationship of productivity and cost.Recently, Company ABC revamped its compensation 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 companys products. The most prominent revision in the companys compensation package is the awarding of incentive to a production teams productivity rather than on the single team members performance. At the end of each m onth, the teams actual productivity is measured and compared to the teams target productivity for the month, whence the team is given a bonus ground 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 $1000 and there are 5 members in the team, then each one will get $200 as incentive bonus.By directly linking the individual employees incentive with that individuals teams productivity performance, Company ABC virtually acknowledge that the individual has a little impact on productivity and that the teams effort has a much more significant impact. Moreover, by putting the province 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 sick or vacation leave, the team is responsible in ensuring that the teams producti vity does not suffer in spite of the absence.I think that the decision to link incentive and team productivity is a very cute decision. The new incentive program allows the company a chance to increase its productivity without significantly increasing the companys payroll expenses.Moreover, by putting the responsibility to reminder productivity at the team level, slackers or below average employees will be pressured by the rest of the team to contribute more into the teams productivity efforts.However, accord 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 at last diminishes. Hence, a new incentive program alone 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 real GDP or gross domestic product per p erson grows because technological change induces a level of saving ad investment that make 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. reference with several production managers and employees of Company ABC reveals that this is actually what the company did and planned from the beginning. The company introduced its new incentive pro