Case Analysis on Gintong Hiyas
MGT 131 F

Team Cupcake

Aclan, Sherlyn Antoinette B.
Agumo, Elyza Mabel M.
Angeles, Ma. Hannah Selina S.J.
Largo, Marvin Daniel R.
Makahiya, Marriane F.
Manila, Abigail M.
Pabon, Justin Eric

I. Point of view
The point of view of Elizabeth Santos is chosen for this case analysis because the problem was encountered under her supervision, some time after implementing the individual incentive scheme. Also, her training and knowledge as a bachelor of Commerce graduate proves her capability to effectively supervise the company.

II. Analysis of Present Situation
Company Analysis
Gintong Hiyas is a company that sells handmade gold and other jewelry. The business, which started in Quezon City in 1986, is owned and operated by the Santos family. With the establishment of new shopping malls, four new outlets were opened in different parts of Metro Manila with each member of the family directly managing and overseeing the day-to-day operations of the store assigned to them. The said expansion, however, created difficulties in managing the five outlets so the Santos family decided to close the original store and to defer the opening of new sale outlets.
Elizabeth Santos is one of the managers of Gintong Hiyas. Being a graduate of Commerce in 1992, she was assigned to design store management systems and procedures for all the stores. Among her contributions were a system for stock inventory taking and reconciliation at the end of each working day and a better bookkeeping and accounting system. In effect, she has increased the sales of her assigned branch. In 1995, her father transferred the responsibility of supervising another store because his father wanted to focus on the production side of the business.
Elizabeth implemented a bonus incentive scheme to motivate her staff and to increase their sales as well. In the first months of implementation of the bonus system, she has seen the improvement in the attentiveness of her staff which resulted to an increase in the store sales. Employees from other Gintong Hiyas branches heard of the staff incentive system and asked for the same system to be applied to their respective stores. However, the Santos family decided not to adapt the system companywide because they are yet to determine if the system is significantly beneficial.

III. Problem Statement
How will Elizabeth Santos modify the incentive system to promote camaraderie among her employees while still increasing the store’s profitability?

IV. SWOT analysis a. Strengths 1. There is an effective division of labor among the members of the Santos family. 2. Elizabeth Santos’ educational and training background in Commerce is an advantage for the company. 3. The company has systematic bookkeeping and accounting systems.

b. Weaknesses 1. The incentive system caused some negative effects within the organization such as unhealthy competition among the employees resulting to the decreased job satisfaction. 2. Some customers are left unattended. Thus, low quality of service is provided.

V. Formulation and Evaluation of Alternatives Through Pros and Cons

Alternative 1. Changing the individual incentive system to group incentive system
Employees will be grouped to foster camaraderie. To avoid factions among the employees, groupings will be changed every month.

Pros | Cons | * Builds teamwork and promotes harmonious relationship among employees * Motivates employees to work together to achieve one goal * Creates a friendly working environment for the employees which could | * Possibility of having free-riding employees | translate to higher productivity * Higher productivity means higher sales and profit for the company | |

Alternative 2. Retain the individual incentive system but with modifications
The individual incentive scheme will still apply but manager will only give salary incentive if all the employees are performing well and meeting their sales quota. Pros | Cons | * Top performers will help other employees to meet their quota * No one will be left behind * Ensure the organization’s profitability | * Difficult to implement when there are very low performing employees * Employees might discriminate the employees who could not meet their sales quota |

Alternative 3. Profit sharing among the employees on each company outlet Part of the profit of the store (if there is) will be equally divided among all the employees. Pros | Cons | * Promotes camaraderie among employees of an outlet * Increases sales in every outlet | * Possibility of having free-riding employees * Hard to generate a standardized criteria since external factors that affects the sales of different outlets must be considered |

Alternative 4. Punishment for low-performing employees
Since there are no necessary actions when an employee does not achieve his/her quota, punishment is needed to oblige them to meet their quota. Pros | Cons | * Eliminates free rider problem because every employee is compelled to do his/her job | * Some employees might quit the job when they fail to meet their quota to avoid punishment * Punishment negatively affects employee’s behaviour |

Decision Criteria | Profitability (30%) | Customer Satisfaction (20%) | Job Satisfaction (20%) | Promote healthy working environment (30%) | Total(100%) | 1 | 25 | 18 | 18 | 30 | 91 | 2 | 28 | 17 | 12 | 25 | 82 | 3 | 20 | 17 | 15 | 23 | 75 | 4 | 25 | 15 | 15 | 20 | 75 |

VI. Decision and Rationale
The individual incentive system had increased the store’s profitability but had caused the employees to be aloof and distant from one another. To address this problem, Alternative 1, which is to convert the individual incentive system into group incentive system is chosen. The said solution would provide the employees with a friendly working environment that could motivate them to be more productive at work since “happy organizations are more productive.”
A productive employee could mean that the employee is also satisfied with his/her job. Consequently, job satisfaction increases customer satisfaction and loyalty. This customer loyalty and satisfaction would eventually increase the sales of the company.
All in all, implementation of a group incentive system rather than an individual incentive scheme would eliminate unfriendly competition and promote camaraderie among employees while still increasing the company’s profit.
VII. Implementation Plan 1. In carrying out the chosen alternative, Elizabeth Santos should first inform the family about the plan to implement the group incentive system. 2. Upon the approval by the members, the group incentive system will be first implemented within the stores managed by Elizabeth. 3. Elizabeth Santos will have to divide the employees of a sales outlet into groups. These groupings will be changed every month to avoid factions among groups and to promote a harmonious relationship with every employee in the outlet as well. 4. After three months, the incentive scheme will be evaluated by Elizabeth. 5. After seeing the effectivity of the incentive scheme, it will be suggested to the Santos’ family. When the family approved of the said incentive scheme, it will soon be implemented for the whole company.

VIII. Contingency Plan Though the group incentive system is relatively the best solution to the problem, there are still potential setbacks like the possibilities of free-riding. Free riders are the members of the group who benefit from the rewards acquired by the group but have only done minimal work and exerted minimal effort in attaining the group’s goal. To limit free-riding, Elizabeth Santos must closely monitor the work of her every employee. In case the decision of making the incentive system be in groups will not be pushed through, perhaps, Santos family did not allow it, an alternative for Elizabeth Santos is to just continue with the individual incentive system but modifying it a bit. She would require that all the employees must meet their quota before she gives incentives to any employee. In that case, those well performing will help those low performing so that they can all meet their quota and get their respective incentives.