Case - Chekovski Printing

Chekovski Printing is a small- to medium-sized manufacturer of account books, ledgers, and various types of record books used in business. Located in Halifax, the company has annual sales of about $12 million, mostly in the Atlantic provinces. The printing company started out of the family garage and has grown into a well know high-quality supplier in the region.

The owner, Ola Chekovski, is a firm believer in making a high-quality product that will stand up to many years of use. She uses only high-grade paper, cover stock, and binding materials. Of course, this has led to high production costs and high prices. She also believes in a high level of customer service and is willing to make the products to customers' specifications whenever they so request. However, resetting the equipment for relatively short production runs of customized products takes considerable extra time and, of course, also drives up costs.

The firm employs about 80 people, most of whom work in production. The firm has a few supervisors to oversee production, but their responsibilities are not clearly spelled out, so the supervisors often contradict one another. There is no system for scheduling production; in fact, there are few systems of any kind. Whenever there is a problem, everyone knows that you must go to Ola if you expect a definite answer.

The company also has several salespeople who travel throughout the Atlantic region; most of them are relatives of Ola or his wife. The company has one bookkeeper to keep records and issue the paycheques, and several office employees to handle routine administrative chores. The firm has no specialists in accounting, marketing, human resources, or production; Ola handles these areas herself, although she has no real training and little interest in any of them except production. She focuses most of his attention on ensuring product quality and on dealing with the countless problems that everyone brings to her every day. She has often been heard to exclaim, in her usual good-natured way, Why am I the only one who can make decisions around this place?" as she deals with each of these problems.

When Ola was growing up, both her parents (her father was a printer, and her mother was a seamstress in a garment factory) had to work hard to scratch out a living for their family. In those days, employers who showed little consideration for their employees were the norm, and Ola resolved that things would be different if she ever became an employer. Today, Ola tries hard to be a benevolent employer. Although she feels the organization cannot afford any formal employee benefits, she often keeps sick workers on payroll for a considerable time, especially if she knows the worker has a family to support. Ola is well liked by most employees, who have shown little interest in unionization during the few approaches made by union organizers.

Ola has no formal system for pay and tends to make all pay decisions on the spur of the moment, so almost everybody has a different pay rate. She has never gotten around to giving annual raises, so any employee who wants a raise must approach her. She gives raises to most people who approach her, but the amount depends on her mood at the time and on how well she knows the employee. For example, if the firm has just lost a major customer, raises are lower, and if the firm has just booked a large order, they are higher. They are also higher if she knows the employee has a family to support, or if the employee's spouse has been laid off, or if the employee has added a new member to the family.

Ola believes that a good employer should recognize the contributions made by employees during the year. So, every Christmas, if profits allow, she gives merit bonuses to employees, which she says are based on their contributions to the firm. One day in early December, she sits down with her employee list, in alphabetical order, and pencils in an amount next to each name.

Everybody gets something, but the amounts vary greatly. If she can associate a face with the name (which is difficult sometimes, because new employees seem to turn over a lot), she tends to give larger bonuses. And if she can remember something such as a cheerful attitude, the bonuses are higher still. But if she remembers anyone complaining about that employee for some reason or another (she usually can't recall the exact reasons), the employee gets a smaller bonus. Not surprisingly, longer-term employees tend to receive much higher bonuses than new employees. She has noticed this tendency but assumes that if an employee has been with the firm longer, that person must be more productive, so this is fair. She personally distributes the bonus cheques on the last working day before Christmas.

Since she has just turned 60, Ola is planning to retire in the next year or two and turn the business over to her daughter, Gina Chekovski, who is just finishing her program at Trent University, after working in the business a few years and deciding to upgrade her knowledge. Ironically, it was on the day of her 60th birthday that her bookkeeper informed her that there wasn't enough money in the bank account to meet payroll.

What is the assessment of the current compensation setup? (This is for a motivation and compensation class for HR)