Here is the question:

What are some advantages and disadvantages of a person-focused pay system at Mitron. What approach would you recommend for Holly to take in designing a person-focused pay system?

Here is the case study:

The technicians at Mitron Computers are integral to the company's success. Mitron builds custom personal computers for several office supply chains. The company's ability to build a quality product to specifications in an efficient manner allows Mitron to hold an advantage over competitors. However, recently the company has experienced some delays in shipments, and the plant manager is growing concerned.

Mitron works directly with the retail locations of the office supply chains to meet the needs of customers ordering computers with specific capabilities. A customer at a retail store orders a computer with certain components, and the order is sent to Mitron to be fulfilled within a specified time frame. The technicians work in teams to build the computers to the desired specifications. It is a complex process, and the technician's ability to build the computers efficiently has helped build Mitron's reputation as a quality producer of personal computers.

Depending on the specifications, building each computer can involve between 10 and 18 different steps. Most technicians have the knowledge and skills to complete one or two of the steps, but some technicians can complete multiple steps. The technicians that can complete multiple steps provide the company greater flexibility in scheduling and ensuring the computers are built on time. Each step in the building process involves intricate procedures, and a technician must take the initiative to attend training to learn each new step. However, there is little incentive for the technicians to attend the training.

The technicians work in teams to build the computers, and they are paid an hourly pay rate plus a team-based bonus payment for each computer that is built on time with no defects. The teams are composed of technicians that have complementary skills, but the company has had some delays when a team member with the skills to complete a certain step is absent or already working on another computer. This problem occurs often as few technicians have the skills to complete the higher-level steps in the building process. Most technicians do not want to take time away from their work to attend the training as they will likely lose some of their team-based bonuses.

Holly Turner, Mitron's human resource director, has been asked by the plant manager to examine the technician's pay structure to determine if a change in the structure could affect the technician's efficiency. Holly is confident that the more steps each technician can complete, the more efficient Mitron will be in building computers. Therefore, Holly is considering implementing a person-focused program that would tie the technician's pay to the steps in the building process that he or she is trained to complete. By doing so, Holly believes the technicians will be more likely to attend training and learn the new skills. With more technicians trained to complete the higher-level steps in the building process, the teams will be better prepared to meet shipping deadlines.