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Compute Bonus Allocation Based On Employee Performance

Question

The Alliance company is instituting a new employee bonus system, to encourage best efforts. While normal pay raises for personnel will be granted as in the past, the new system will choose the “top gun” employees for an additional $1,000 bonus. The exact number of bonus recipients was as yet undecided, but could be as many as 20% of the 151 employees. Lots of positive response was generated, as people speculated about how they’d spend “their” thousand dollars, although some employees who thought they’d never receive the bonus were grumpy and suggested the money could be better spent on, say, improvements to the dental plan. Management was also divided on the issue. One of the senior foremen said he’d seen incentive plans like this one before, and that they never seem to be fairly administered. He said: “People never seem to get what they think they deserve, and it just causes bad feelings all around”. Despite the complaints, management was determined and the bonus plan was set up for the following year. A new committee was struck to oversee the awarding of bonuses that would be awarded based on supervisor ratings of employee performance. These ratings already existed in Alliance, although they currently had no current influence on employee compensation. (Mostly, the ratings were used as a track record for justifying employee dismissal). Ratings were done on a 10-point scale, so each employee received a score from 1 to 10. Training sessions were held to help supervisors establish standards, but there was still a wide variation among supervisors in the scores they assigned. This variation didn’t matter so much in the past since the scores were generally only used for employee termination. This year, however, the ratings would be used to determine bonus-worthiness. Suppose you are a member of the bonus committee. Use the data in the file Alliance bonus.xlsx to determine your list of bonus winners, and defend your list. Is your allocation fair and free from bias (you will need to check for possible racial and gender bias)?

 

Summary

The question belongs to Human Resources Management and it discusses about bonus allocation to employees based on employee performance.

Total Word Count 237

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