Safelite Auto Glass

Group 6
Aditya Kumar(PGP/23/312)
Alex Thomas(PGP/23/316)
Deepshika Choudhary(PGP/23/325)
Pranav Patki (PGP/23/341)
Vibhor Agarwal(PGP/23/367)
 Reasons for low productivity of Safelite
• Employees weren’t contributing much effort towards work
• change of customer attitude as customer switch from store based service to
mobile service.
• There were frequent errors between the despatch center and technicians.
• In approx. 10% - 20% of the cases, technicians would often find out that
they were given the wrong parts upon arriving at the destination.
 Does the Plan address the problem
• No, the plan failed to address the problem
• Conflicting objectives between $1000 bonus on opening new store and piece
rate pay
• Employees were losing bonus if they worked for piece rate pay.
• Employees lost motivation due to insecurity of fixed pay and company was
losing core asset
• Company experienced interruption in production
 Pros and Cons of switching
• Advantages:
• Company reaped main benefit of saving money
• Improved profitability as no agreement to pay fixed wage
• Disadvantages
• Employees lost motivation due to insecurity of fixed pay and company was losing core asset
due to money saving objective.
• Employees would be concerned with quantity than quality resulting in quality complaints
• Employees would be inclined to leave the jobs resulting in high recruitment and training
cost.
 Should there be a Guaranteed Wage?
Yes there should be a guaranteed pay, which would be as follows:
• May offer guaranteed fixed pay to foreigners as they are committed,
innovative, energetic, and ready to work even at lesser but guaranteed pay
• Prepare a comprehensive pay plan, which should be a mix of fixed pay
component and variable pay component. The variable component should be
paid when production reaches above a threshold, while deductions for sub
quality production.
 Consequences of switching on factors
Factor Consequence
Turnover The employee turnover would increase as the employees would face insecurity of pay
Recruitment Due to increased employee turnover on switching to the piece rate pay, the
recruitment cost of the company would go up, as it would need to increase its hiring
activities
Productivity The productivity in terms of quantity of production would go up as the workers will
be incentivised to increase the units of production.
Product Quality Product quality will suffer on switching to piece rate system as workers will only
focus on increasing the quantities produced while the quality of the products will
suffer