PriMan Group 3 - Presentation

Plush Management
Perks: Partaking or
Pruning?
Group 3: Fernandez, Gonzales,
Guzman, Jacinto, Lavarro
A
Facts of the Case,
Objectives, and
Statement of the
Problem
Facts of the Case
Two top executives engaged in an argument regarding executive perks (the
private dining room, company cars, first-class air travel, etc.)
● Catherine, the VP for Human Resources suggested getting rid of

executive perks.
● Sam, the VP for sales and a loyal employee for 25 years, vehemently
disagreed with this proposition.
○ After spending so much time climbing up the corporate ladder, he
wishes to enjoy the full benefits of his position.
○ One of the perks Sam valued was the reserved parking spaces.
● When Sam asked Catherine how she would feel if the company its on-site
daycare, Catherine got defensive and said “They wouldn’t dare do that!”
● An annual executive retreat will be held next weekend.
○ Executive perks topping the agenda.
Facts of the Case
The executive perks currently offered by the company include:
● Company cars
● Reserved parking spaces
● Company cellular phones
● Personal financial counseling
● Personal liability insurance
● Executive dining room
● First-class air travel
● Free travel for a spouse on extended business trips
● Signing bonuses
● Stock options
● Country club memberships
● Large, expensively furnished private offices
● Home security systems
● Home computer/office equipment
Statement of the Problem
Should executive rewards and perks be completely eliminated,
completely retained, selectively retained, or restructured as a whole?
Objectives
● To make the best managerial decision, with regard to
executive perks, that will bring about the most benefit to the
company
○ To effectively make use of the decision-making steps
B
Diagnosis and
Analysis of
the Case
Preliminary Analysis
Type of Decision required: Nonprogrammed Decision
● Made in response to a unique situation that is poorly defined,

highly unstructured, and have important consequences to the
company
Type of Organizational Problem: Uncertain
● Managers know which goals they want to achieve but information

about alternatives and future outcomes are incomplete
Catherine’s Approach: Behavioral Style

Sam’s Approach: Directive Style
Decision-Making
Steps
01 Recognition and Decision
Requirement
The problem at hand presents with uncertainty
Internal Factors
● Sam and Catherine’s opposing views
● The effect of executive perks on its beneficiaries
● The views of non-executive employees
External Factors
● Information from research and other companies
A Conceptual Model of the Influence of Executive Compensation on
Employees’ Attitudes and Behaviors through Precipitating Events
(Neely and Boyd The Influence of Executive Compensation on

Employee Behaviors Through Precipitating Events)
02 Diagnosis and Analysis
of Causes
Catherine’s Why’s
● 1st Why: Catherine suggested to remove executive perks
● 2nd Why: Catherine as the head of HR might have received complaints
from non-executive employees
● 3rd Why: Resentment brewed among non-executive employees
● 4th Why: Non-executive employees might have felt inferior to the
company’s executives
● 5th Why: They might have seen the tangible benefits that executives have
at work such as the reserved parking spaces executive dining room large,
expensively furnished private offices.
02 Diagnosis and Analysis
of Causes
Sam’s Why’s
● 1st Why: Disagreed with Catherine’s suggestion
● 2nd Why: Sees them as necessities for executives (Comparison of On-site
day care to reserved parking slots for executives)
● 3rd Why: Deeper reason might be because he sees these benefits as
justified given their hard work and commitment to the company
● 4th Why: He has worked for 25 years to become the vice president
03 Development of Alternatives
Decision-Making Model used: Political Model

● For situations involving conflicting goals, uncertainty/ambiguity, different
viewpoints, and bargaining among coalitions
● The presence of a coalition is evident and is represented by the group
● In the case two people who had different interests started the conflict
● Disagreement occurred because of personal constraints between Catherine
and Sam
● The course of action selected was done through debate within the coalition
with little information → in the end a consensus was agreed upon
● The interest, goals, and values of the group may or may not be aligned with
others in the organization
03 Development of Alternatives
Personal Decision: Behavioral and Conceptual

● Behavioral
○ How others would feel were taken into account in decision making and each perk’s
degree of importance was taken into account
○ Those who are not able to benefit from the executive perks were taken into account
○ Possible reactions to each solution was taken into account such as reactions and
its impact on work for others
● Conceptual
○ Information being dealt with to come up with a solution was broad
○ Due to the nature of the problem, creating and implementing the chosen solution is
flexible and can be done creatively
○ Solutions take into account social standings of the people in the company
Proposed Alternatives
01 Remove all executive benefits
02 Retain all executive benefits
03 Retain some of the executive benefits
04 Selectively eliminate perks and tie some

perks to the performance of the executives
01 Remove all executive benefits
Advantages Disadvantages
● Less costs from business expenses of ● Risk getting backlash from executives
the company ● Less productivity from executive
○ Money allocated for these perks employees who’ll lose their privileges
can be used somewhere else (i.e. ● No motivation for non-executive
additional benefits for non- employees to aim for an executive
executive employees) position besides a pay rise and more
● Less disparity between executive and work/responsibilities
non-executive employees ● Risk losing your executives to
companies who offers better
perks/benefits
02 Retain all executive benefits
● Tax deductible expenses for the ● Risk getting backlash from non-
company (e.g. insurances, transpo) executive employees
● Executives will be happy → will remain ● Atmosphere in the workplace will
productive if these perks motivated continue to deteriorate
them to work hard and no reason for ● Manager-employee boundary will
them to be tempted to leave persist
● Good for executive-level recruiting
opportunities
○ Good executive benefits can help
a company attract external talent
into the company
03 Retain some of the executive perks
● Can potentially mitigate some of the ● Effects are entirely dependent on what
brewing resentment among the non- perks will be removed
executive employees ● Backlash from both executive and non-
● Less costs from business expenses of executive employees if the perks
the company removed don’t address the problem
● Executive employees will still have a
reason to be productive and to stay in
the company
● Non-executive employees will still have
a reason to aim for a higher position
04 Selectively eliminate perks and tie some
perks to the performance of the executives
while offering benefits to employees
● Can be an amicable solution for both ● Resistance from the executives due to the
executive and non-executive employee changes brought about by this option
problems ● More administrative work/cost is needed
● Overall, will lead to a more dedicated to keep track of the performance of
workforce and greater employee executive employees
commitment
○ Increased motivation for executives to
perform well since they now have to
deliver on certain goals before they
can enjoy their benefits
○ Increased productivity for non-
executive employees since their
managers will be more hands-on and
because they have motivation to want
to aim for a higher position
Activity Questions
1. Of the perks listed above, choose three that your managers are most
likely to desire. In other words, which three executive perks would your
managers scream the most about if you took them away? Explain your
reasoning for each of your three choices.
● Stock options
● Reserved parking spaces
○ A necessity for the fast-paced schedules that executives need to
keep up with; save time, thus increasing productivity
● Signing bonus
○ It’s already their reward for reaching the promotion
Activity Questions
2. Of the perks listed above, which three probably create the most resentment
among your non-managerial workforce? In other words, which three executive
perk anger your workers the most? Explain your reasoning for each of your
three choices.
● Executive dining room
○ Unnecessary; Does not increase productivity
● Large, expensively furnished private offices
● Free travel for a spouse on extended business trips
○ Unfair; Appears like you are working just to give your boss’ spouse a
free vacation
C
Recommendations
and Conclusion
Activity Questions
3. Which of the following options is likely to benefit the company
most in the long run?
● 04 Selectively eliminate perks and tie some perks to the
performance of the executives
○ Performance can be based on (1) attainment of the executives’
respective department goals for the year; and (2) overall
performance of the company
○ Budget allotment from the benefits removed can be used to
give employees more benefits, some of which can also be tied
to their individual job performances
Perks to Keep
Reserved parking spaces
Personal financial counseling
Personal liability insurance
Signing bonuses
Stock options
Country club membership

Thank you
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Plush Management

● Catherine, the VP for Human Resources suggested getting rid of

● Made in response to a unique situation that is poorly defined,

Type of Organizational Problem: Uncertain

● Managers know which goals they want to achieve but information

Catherine’s Approach: Behavioral Style

(Neely and Boyd The Influence of Executive Compensation on

Decision-Making Model used: Political Model

Personal Decision: Behavioral and Conceptual

01 Remove all executive benefits

02 Retain all executive benefits

03 Retain some of the executive benefits

04 Selectively eliminate perks and tie some

Personal financial counseling

Personal liability insurance

Country club membership

Please keep this slide for attribution.

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