Grant Lawson has just been appointed as the new financial controller of Safety Chemicals Ltd, which has three separate divisions Industrial Chemicals, Paints, and Household Chemicals. During his first week on the job, Lawson receives a visit from the managing director, who says
I’m so glad you have arrived. We can now put into place our new profit-sharing plan. I want all employees across the divisions to shore in the rewards of our good financial performance. Starting next quarter, per cent of the company’s quarterly profit will go into a pool, and at the end of the financial year, this will be distributed to employees in proportion to their base pay. This will really give our employees increased motivation to strive harder!
Write a memo to the managing director, outlining the advantages and disadvantages of the typed incentive scheme that has been suggested.