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Designing Incentives


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Summarize your findings in a 1-2 page paper, and be prepared to discuss your results in class. Your paper is due in Canvas by Sunday evening. Use in-text citations to show where you are applying or discussing content from any outside sources, including websites. End your paper with a References list that gives the full details about the sources. In-text citations and References should be formatted according to APA standards; The Atlas Corporation rents and sells furniture and appliances to individual consumers. The company’s primary market focuses on customers who rent-to-own; the customer pays a rental charge (which includes a 28 percent interest rate) for a specified time and at the end of that time, owns the furniture. Atlas has its own credit department for these contracts. Over the past two years, it has been difficult to collect customer payments in a timely manner. As a result, Atlas has experienced a sharp drop in profitability. The effect on profitability is such that Atlas now pays a higher interest rate (8 percent) to its bank to carry its own indebtedness. Atlas wants the accounts receivable (A/R) department to increase its collection of past-due bills. It has turned to you in the HR department to develop a system to incent and reward A/R clerks who increase the dollars in collections each month. Each A/R clerk is a non-exempt hourly employee. Applying what you know about what makes incentives and rewards effective, think through the process of designing an incentive and reward program for Atlas. Identify any issues that must be addressed. The information in the table below provides the previous year’s results (“Monthly Total” means the amount due but NOT collected in that month). Based on what you’ve learned in this module’s materials, and reviewing the table above, answer the following questions: What do you think is a realistic goal for Atlas to set to reduce outstanding amounts each month? This can be in dollars or a percentage of the total amount currently due. Should this be an individual-based incentive, a team-based incentive, or a combination? How would you design it? When should the incentive/reward be given—monthly, quarterly or annually? How should it be given—publicly or privately? What should the reward(s) or incentive(s) be? Who should determine what they will be and how they will be distributed? (Source: Society for Human Resource Management case study “Designing Incentives” by Dale Dwyer, Ph.D.)


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