DATE: TO: November 21, 2013 Fred Smith, CEO, Miouri Computation Company Bertram Johnson, VP, Human Resources CASE ANALYSIS AND CULTURAL STRATEGY REPORT: IMPLEMENTATION OF PAY-FOR-PERFORMANCE (PFP) SYSTEM FROM: SUBJECT:
Dear Mr.Smith: As a member of HR department in MCC, I know that MCC desires to become a worldwide marketing leader.It plans to increase sales in foreign countries.It realizes international coordination must be addreed and aembled centrally with coordinated policies for human resources, sales, and marketing.With this plan in mind it expects to improve customer satisfaction as well.Thus, I was selected to test and implement a new pay-for-performance system for our employees at Miouri Computation Company.It is a Reward System that is designed to motivate employees who serviced mid-size computer.I thought this idea could help MCC to increase its sales force.It is because “Money as a motivator it can motivate people work hard to get reward”(Houghton Mifflin, 1993).During the meeting in Milan, various management supported the pay-for-performance idea.They thought the system should operate the same for employees in each geographic region.At the beginning of implementing the system, it was going well at each areas.Some managers were against with this system because of their different their cultural beliefs.Some manager agreed with this system.Pay-for-performance was tried for two years in the St.Louis area and the two elements were: Firstly, the top sales person can get a 100% bonus.The Number 2, sales person can get a 60% bonus.Number 3 and 4, sales people get a 30% bonus.Secondly, all sales people who had the basic salary, got a 10 % reduction.Managers reacted differently to the pay-for- performance system during the experiment because of the culture different in St.Louis, Sweden, Italy, Indonesia, Singapore, and Dutch and Scandinavian.For example, while pay-for-performance was in its trial period, many employees in St.Louis were not able to accept this system.As a result, five sales employees sufferedbecause felt disrespected by MCC and left the company.Furthermore, total sales in St.Louis did not increase.Moreover, when the system operated in Sweden, the system was a failure.The reason is becausethe culture in Sweden is a family structure.Because of this particular culture, when something happens in one\'s life, it prohibits maximum performance.For instance, this was the case for Clara and Peter who worked for the Swedish software company.Clara has two children and lost her husband this past year causing lots of stre which lead to a decrease in performance.Peter wasn\'t happy because his marriage is dwindling and finances are low which in turn decreased his performance.Unfortunately for them, weak performance equals weak pay, only bringing them down further.Therefore, the system could not apply to Sweden because it would not motivate employees to sell more products.It hurt their feelings and made them depreed.Unfortunately, the trial of pay-for-performance system didn\'t work well in Italy.As I got news from Italy, the sales person who got the reward for the period felt guilty in front of the others and tried extremely hard the next quarter nit to earn a bonus.Moreover, trials of system did not prove effective in Indonesia because of the culture.Facing change might impact inwardly and outwardly.Indonesia treated their customers as family.They believed that they need to share good time and bad time with their customers.For example, Mr.Djawa from Indonesia gave me his opinion.He thought that pay-for-performance system should not get involved in the sales department.It is because this action might improve performance in sales, but it also would neglect our customer´s satisfaction.We would also lose customers as well.Neverthele, Singapore wanted to respect their customers.They didn\'t want to put stre for them to buy MCC\'s products.They believe the go-for-quick-buck philosophy would make them lose many customers.Lastly, Dutch and Scandinavian supported the system and had not problem about payment.I learned something from this event.Managers must become proficient cro cultural communicators if they wish to succeed in today\'s global environment (Munter, 1993, p.1).I agree with this idea because this is a MailTip world.We should not only just focus sales, but we also need to understandcultural conflicts as well.It can help us implement pay-for-performance in different areas.From this event, I learned we should not give reward for individual performance because it does not really motivate employees.We should give reward to each area or state.If I were given in a specific area, we could give a reward for that area.I thought it would be a good idea to revamp our pay-for-performance.For example, in order to avoid guilty for Italians, I suggest Italy’s management could select different people or department to compete to get reward.Because of their culture, I would start off by welcoming everybody to the meeting and making sure they are comfortable.With that in mind, I would not want to upset either side so I would be cautious about what people say.I would never be too forward.I would ask them how busine is in their perspective countries.Since I already know everything about the rewards system I would ask on now to improve the system suggestions.This is because different cultural beliefs could some problems.For example, when you call a meeting to reason with foreign partners you want to approach everything in steps because of the cultural iues.\"It is easy for British, North Americans or Northwest Europeans to sympathize with Johns or Bergman about \"excitable\" Italians.The incentive system either works or it does not (Trompenaars, chap 6).When conducting meeting that discu new policies, we should get opinion from employees about their cultural beliefs.I believe it will increase productivity and help us to write effective policies.Moreover, as the source from book, “What we believe defines, in so many ways, who we are” (O’Rourke, 2013, p.155).Employees in different areas had their own definition about pay-for-performance.As a result, we should not only apply this system to our company, but we should also consider the multi-cultural condition in our company.If we only focus on this system, it makes our company appear to be focus on more conscious the money rather than culture of employees and care of employees.In short, I suggested that we should be depend on the culture of different areas to determine how the pay-for-performance operate at each area of the company.Sincerely, Bertram Johnson VP, Human Resources
References O’Rourke, James (2013).Management communication: A Case-analysis Approach, 5th
Edition.Upper Saddle River, NJ: Prentice Hall.PP.155.Munter, M.(1993, May-June).Cro-cultural communications for managers.Busine Horizons, PP.1.Hays, Scott.(1999).Pros & Cons of pay for performance.Workshop.PP.68-73.
Trompenaars, Fons, & Hampden-Turner, Charles (1998).Riding the waves of culture: Feelings and relationships.New York: McGraw Hill.Ch.6.
