You are the plant manager. You have recently implemented a bonus system for your employees that provide a 10% bonus for favorable variances. What are the potential benefits, costs, and ethical concerns of such a bonus system?
Solution
Solution:
Potential benefits, costs and ethical concerns of Bonus System of 10 % for Favourable Variances
Potential benefits - The potential benefit can be the increased efficiency of employees, as they would feel motivated for gaining extra wages for the same work done or favorable variance. They will try to improve their efficiency, as bonus system will act as a financial motivator for the employees.
This is ultimately, cause benefit to the organization, in terms of better production or say improved efficiency of the employees, which will act as the POTENTIAL BENEFIT to the organization.
Potential Cost - The Potential Cost to the organization will be, the extra payment to the employees for the same work done, for which before the bonus system no extra payments were made.
Those extra payments will be treated as POTENTIAL COSTS of the Bonus System.
Ethical Concerns - The ethical concern can be, that the bonus systems are short term benefits, but organizations should think about long term benefits. If the organization is adopting such bonus system, it should make sure that long tems benifits should be met also.
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You are the plant manager- You have recently implemented a bonus syste.docx
1. You are the plant manager. You have recently implemented a bonus system for your
employees that provide a 10% bonus for favorable variances. What are the potential
benefits, costs, and ethical concerns of such a bonus system?
Solution
Solution:
Potential benefits, costs and ethical concerns of Bonus System of 10 % for Favourable
Variances
Potential benefits - The potential benefit can be the increased efficiency of employees, as they
would feel motivated for gaining extra wages for the same work done or favorable variance.
They will try to improve their efficiency, as bonus system will act as a financial motivator for the
employees.
This is ultimately, cause benefit to the organization, in terms of better production or say
improved efficiency of the employees, which will act as the POTENTIAL BENEFIT to the
organization.
Potential Cost - The Potential Cost to the organization will be, the extra payment to the
employees for the same work done, for which before the bonus system no extra payments were
made.
Those extra payments will be treated as POTENTIAL COSTS of the Bonus System.
Ethical Concerns - The ethical concern can be, that the bonus systems are short term benefits,
but organizations should think about long term benefits. If the organization is adopting such
bonus system, it should make sure that long tems benifits should be met also.
