Business Case Study — USA Motors
Why didn’t the paid absence plan work?
The paid absence plan did not work primarily because it lent itself to abuse. Instead of providing incentive to give appropriate notice of absences, it allowed employees to exploit the mechanism as a means of increasing their pay. The main reason that was possible is that the paid absence mechanism would have required a corresponding increase in the organization’s regulation and control of the other rules pertaining to absenteeism. For example, instead of imposing a mandatory requirement that any “discretionary” absences must be “use-or-lose” absences, the existing policy allowed them to be accrued and retained after the fiscal year. When combined with the fact that the organization already liberally allowed “unexcused” absences, that removed any possible incentive to “waste” any additional paid absences and created a very natural incentive to do precisely that: to accrue unused paid absence days and continue using established procedures to permit traditional unexcused absences.
At the very least, the paid absenteeism approach absolutely required that the organization prohibit other types of unexcused absences without loss of pay. The paid absence concept should have included specific provisions according to which any unexcused absence would automatically be charged off against any accrued paid absence days. Similarly, the paid absence concept should have been narrowly limited to its specific purpose: to excuse a certain number of otherwise unexcused absences. It never should have allowed the accrual, retention, and carry-over of unused absences. Finally, there should have been rules limiting their use so that they were not usable during the days immediately preceding or following scheduled holidays or vacations. There is no reason that the mechanism would have to be applied without restriction or on an all-or-none basis. The organization had no obligation to allow the mechanism in the first place. Therefore, prohibiting paid absences from being accrued and carried over or misused immediately before or after vacations would have been perfectly appropriate.
2. What Plan would you recommend to USA Motors? Provide rationale for the plan.
The proposed “brainstorm” of Jack Parks is highly impractical. The very complex nature of the calculations only further detracts from the fundamental issue: namely, that the purpose of the paid absences system is to promote responsible communication between employees and supervisors and not to become a highly regulated new system for employees to master to their benefit. It is a mistake to use numerical criteria and to link percentages of pay to attendance and use of paid absences. That approach only encourages employees to try to “game” the system by identifying and exploiting any existing loopholes in its structure.
The entire system should be implemented as a system of principles instead of numerical abstractions. Moreover, the real value of the system should be in the background of the way it is introduced, explained, and administrated. Employees should be advised that it is intended specifically to increase rather than decrease their responsibility to the organization and that the gracious and gratuitous gift must be appreciated for the generosity it represents instead of exploited for personal gain at the organization’s expense. Employee orientation and training should provide an outline of the appropriate use of the paid absences and also outline the prohibited uses together with the specific rationale for the limitations that must apply to it to prevent abuse. If implemented in that way and with the previously referenced suggestions for rules to prevent abuse, the system could work in principle in a highly revised format as indicated.
George, J.M. And Jones, G.R. (2008). Understanding and Managing Organizational
Behavior. Upper Saddle River, NJ: Prentice Hall.
Robbins, S.P. And Judge, T.A. (2009). Organizational Behavior. Upper Saddle River,
NJ: Prentice Hall.
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