23 Jun The system worked well for two months after initiation of the program.
The system worked well for two months after initiation of the program. On the third month, floor time ran out. Agents who had rights to floor time but could not get it were promised extra floor time the next month. The real estate firm added 16 real estate agents (while losing only two) and brought in 18 agents to the training program due to referrals from other agents. The superstar real estate agent Trina was involved with nine real estate transactions during the three-month period.
Frank decided to change the standard one week before Realtors could sign up for the next floor time. Realtors can now receive up to four hours of floor time per month if they have had a transaction in the last two months (effective next sign-up). All other aspects of the incentive program will continue.
Stacey has been a Realtor with Franks brokerage firm for the last 15 years. She had been on vacation in February and was gone in late March, so she did not get the e-mail on the new incentive policy. She thought she could sign up for floor time because she had a transaction in the last three months. She went on the computer to sign up for floor time as usual on Monday, April 3, at noon. She was locked out. The computer said she had insufficient transactions over the last two months.
Stacey immediately called Frank at 12:05 complaining that she couldnt sign up for floor time. Frank said that she should have been keeping up with all e-mail correspondence from the firm. She said it wouldnt have made a difference. “I went on vacation knowing I was safe for floor time. Now you surprised me. The firm is going to get bigger and bigger, and it is only going to get tougher to get floor time.”
She was disgusted by the fact that her friend Trina received 20 hours of floor time in April. The incentive plan was also unfair to newcomers who get no floor time. Stacey said, “Trina is a machine. She has a staff that helps her get sales. She even hired a person to find Realtors to go to your training seminars. How can I compete against Trina who will capture all the floor time in the firm?”
Stacey also wondered about the training seminars. She got into the business of real estate to sell houses, not seminars.
Frank stated that he wants to give the spoils to those in the firm who produce the most. Trina happens to be one of the most productive Realtors in the city and state. Trina also nets 2.5% with each transaction because she passes the magical $3 million threshold each year. Besides, said Frank, floor time is only a small piece of the pie.
Reference
GundarsKaupins, Boise State University
Questions:
What were Franks strategic purposes for the incentive plan? Did the incentive plan accomplish his purposes? Why or why not?
Which incentive option is Frank choosing?
Do you think that high-level performers should get the bulk of the rewards in an organization, or should the rewards be meted out in a more egalitarian fashion?
Lets say Stacey represents most of the Realtors of the firm. How could Frank have improved the cooperative development of incentives with Stacey prior to incentive initiation?
Given Franks strategic purposes, what alternative incentive plans would be appropriate for this real est
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