The success of the company over the many years of its existence has been attributed to its high operational effectiveness and stellar productivity

The success of the company over the many years of its...

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The success of the company over the many years of its existence has been attributed to its high operational effectiveness and stellar productivity across its departments. The main strategic issue the company is facing and which ties in to the different aspects of its business model is the relationship between its employee compensation and incentive scheme, labor productivity, and financial health and capabilities. In other words, the issue on hand to deal with is how can management keep productivity and efficiency at profit maximizing levels at different variations of the economic cycle in relations to its employee incentive plan while keep financial health in mind. For employees, the incentive plan is not sustainable in an economic downturn scenario. Demand is lower as companies and individuals cut spending. The company will no longer realize operational effectiveness that supports its low-cost strategy since costs are spread over fewer production units. Workers will feel the hit on their pay, which may lead to lower worker enthusiasm and reduced motivation to perform in an efficient manner. Such conditions will also
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