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Barclays

Many firms use individual incentive plans to motivate their employees, and Barclays took the same approach. The multinational banking group relies mainly on cross-selling of products to their customers to generate desired profits. However, in the year 2012, Barclays reported losses that led to dissatisfaction among the shareholders. One of the solutions was employee pay-cuts to retain profits, but this led to many employees leaving the group. To remedy the situation, a new CEO was brought in. The new CEO, Jenkins, came up with several measures to improve profits and satisfy the shareholders. Historically, Barclay’s group used bonuses and commissions as a way to compensate their employees. Jenkins raised employee compensation to competitive levels in an effort to retain the company’s valuable employees. However, in order to make the increased compensation levels sustainable, Barclays had to lay off ten thousand employees.

Group and organizational incentive pay systems have several advantages over the individual system used by Barclays. One of the benefits of organizational systems is that it encourages collaboration and cooperation among employees for the benefit of the company. Individual pay systems mean that employees compete among one another, sometimes at the detriment of the company. For example, several employees might fight for a potential customer and can scare them away. Barclays should adopt the organizational incentive pay system in order to achieve better results. The employees can work together to come up with ways to improve service delivery and sell more products. The company then makes more profit, allowing it to compensate employees better. Individual payment systems may lead employees to keep good ideas to themselves for an edge over their workmates. Such a situation is of no benefit to the overall wellbeing of the firm. The negative competition will hurt the firm in the long run; thus, it should encourage a culture of cooperation among its employees.