STARTING FROM THE GROUND UP AT AMICA WIRLESS

STARTING FROM THE GROUND UP AT AMICA WIRLESS

1. Introduction

This paper will attempt to analyze components of HRM (such as compensation) as they apply to Amica Wireless phone service. Furthermore a major effort will be made to investigate the problems and potentials of Amica wirelesses’ reward system. Lastly paper’s author will give inputs on her reaction based on the assumption of paper’s author working under the balanced reward system of Amica wirelesses.

2. Amica wireless and its reward system principals.

Amico Wireless phone service is an example of combination between mainstream and multisteram organization which emphasizes the empowerment and dignity for all members, and is sensitive to how members of the organizations are treated. Amico wireless differs for other organization since its focus is not just the immediate contribution from the members but also the long term contribution and their loyalty (Dyck, 2010, p. 374).

Managers at Amica wireless designed a very distinctive   reward system and established a very unique organizational culture (Dyck, 2010, p. 380). Both mainstream and multisteram HRM systems utilize, goals feedbacks rewards but what sets Amica wireless apart is the balanced approach on implementing the reward system and its three principals:

Amica’s principal number one is to ensure that all the members received a fair and equal distribution of organization’s profit. Amico’s principal number two is to attempt a reinforcement of teamwork and cooperation among the members of the organization. Amica’s third principal is to motivate and encourage all members to a higher performance. Setting itself apart from other organizations specialy the one in the telecommunication industry who utilize individually oriented compensation system, reward on commission bases, and have a significant gap rewards among departments, Amica increased the focus on group incentives.

3. Problems of Amica wireless reward system.

Even though it is obvious that individual incentive systems are currently more prevalent in majority of organization, the utilization of small group incentives is continuously increasing         (McGee, et al., 2006). This tendency is mainly taking place because group incentive systems are being hailed as resulting in significant productivity gain for employers (Welburne, 1995).

 Both individual incentive system and group incentive systems are type of compensation, where  

compensation itself is one of the components of performance management process (Dyck, 2010, p. 368)  but while  individual incentives are paid to individuals based solely on their individual  

performance , group incentives are paid to individuals based on the total performance of their group ( McGee, et al, 2006). Since neither mainstream HRM system nor myltistream HRM system is completed to perfection Amica wireless system is also vulnerable to issues and complications that require attention. Theoretically, there are compensation experts who maintain that small group incentives are more likely to result in a lower performance compared to individual incentives. The reason behind this issue is the tight connection between an individual’s pay and his/her performance (McGee, et al, 2006).

One of the problems with the system reward of Amica wirelesses   is how this system could affect the productivity of the organization. Because individuals have less control over the group performance they may be less productive than when are receiving individual incentives (McGee, et al, 2006).

Another issue with reward system of Aimca was losing some of its high performers who preferred individual incentives over group incentives (Dyck, 2010, p.380). High performers claimed that group incentives were more stressful to them since they had to work harder and had less individual control over the incentives earned.

Equality and unfairness is also a problem of Amica wirelesses’ reward system.

One of Amica wirelesses’ principals is to ensure fair and equitable distribution of profit among all members( Dyck, 2010,p. 380) but  by distributing the profit equally among low and high performers  will create room for unfairness to high performers who are performing better  than others but are earning less compared to their performance ( McGee, et al, 2006). This unfairness to high performers contradicts the fact that employees must be compensated based on their performance and the value they add to the product they produce.

Furthermore the Amica wirelesses’  system is based on a counterfeit notion of equity  since lower paid workers  who device a change   that creates a major improvement in productivity  will get less rewarded compared to higher paid workers who make little contribution  improve the productivity .By allocating rewards this way a social dilemma is also created  followed by two reasons for individuals to free-ride:1) they do not receive the full benefit of their addition efforts, and 2) regardless of their own contribution ,they can profit from an improvement in group

productivity due to other’s efforts. This will lead to individual workers stop using maximal efforts which will result on potential reduce of productivity and gain (Cooper, et al., 1992).

since employees are not rewarded according to their individual contributions to the group’s increased productivity  as a result free riders behaviors would expected  and a potential reduce of productivity gains (Cooper, et al., 1992). free riders behavior could result on increase turnover and because of the group performance –based pay plans ,turnover will be higher for larger groups (Guthrie, 2000).

 Finally because of  all above listed reason combined f Amica wirelesses’ system requires a higher monitoring ( Nalbantian 1997)  which translates on higher standardization and centralization  of the organization(Dyck ,2010,p. 329),

4. Potentials and positive effect of Amico wirelesses’ system

Many businesses today are altering the ways in which employees receive rewards. Obviously there is a decrease  of traditional pay-for performance system  and an increase  of  creative forms of pay that are based on group performances rather that individual performance (Welburne, 1995).  Reportedly, Fortune 1000 firms increased the use of group incentives by 50% which reflects the fact that more organizations are adopting  , team incentives ,profit sharing, group pay systems  with the intent to redirect their workers  towards group goals and  to support new organizational structures based on work teams ( McGee, et al, 2006).

This tendency is obviously occurring in Amica wireless because group incentive plans appear to be resulting in significant productivity gains for employers .Also the productivity gain it is not the only benefit going to Amica wireless, since the organization is profiting by the increase in product quality as the result of the teal work. It is not very clear why but another benefit of Amica wireless organization from Amica’ system is the decrease on grievances, the management observed less complaints and criticism coming from  the members of the organization (Welburne, 1995).   According to Welburn (1995) adoption of group incentive plans may provide a way to accommodate the complexity and interpendence of jobs, the need for work group cooperation, and still offer motivational potential of clear goals, clear pay for performance and relatively large pay increase. The connection between the pay and performance is not as tight with group incentives as it is with individual incentives but Amica’s employees working in  group  could still influence the group performance and significantly increasing or decreasing

their own earnings by their individual efforts. Likely individuals will not have much control over their earnings while receiving group incentives but the control that they have may be sufficient to

maintain the same level of performance. In addition the higher performance could be supported by the social contingencies that operate within the group (McGee, et al, 2006).

After selecting and implementing the balanced reward system Amica wireless experienced the benefit of employees working as a team. Another benefit that Amica wireless experienced after implementing the group incentives was the higher cooperation among the employees of different departments (customer service representative, salesperson (Dyck 2010, p. 380).

Finally a well designed group performance-based pay plan cannot just increase the productivity but can also reduce organization’s cost since they create a work environment similar to partnership where organizational members share the risk and wealth incurred by the partnership (Guthrie, 2000).

5. The reaction of this case study author (Rudiana) to working under Amica reward system

At first the reaction of this case study’s author was “I would be given the Amica wireless a two week note and leave the organization”. This reaction was result of the fact that the author considers herself a high performer therefore believing on the individual rights to his/her own well being and feeling undervalued, under rewarded the author of this case study would have been overwhelmed by an unfairness sensation. Also the author believes that the organizations are attempting to social construct the  idea of the group incentives not likely because they care about their employees but   because it benefits them (organizations) After a deeper analyze  the author realized that even though  Amica wireless’ system emphasized group  rewards still contained a balanced approach  that included both individual and group incentives(Dyck , 2010, p. 380).Therefore the author of this case study was willing to give the Amica’s  reward system a try  and then make a decision. If after the trial period the author of this paper was not satisfied with the outcome she would have considered two options:

1- Attempt to negotiate with the managers of the organization for a better compromise

2- Apply for a position with other organizations.

6. Conclusion

In an ideal market workers must be paid in accordance with the value that they add to the product they produce. But in the reality of our modern world it is very difficult to put a value on individual’s efforts as result compensation has become increasingly detached from worker productivity (McGee, et al., 2006).

At last when it comes to incentives, providing employees with more than one choice (individual and group incentives) would benefit all the stakeholders.

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