Sample Essay

Topic: Disparity in the compensation plan


Sharpe BMW is one of the dealers of Serra Automotive Group and it’s the only BMW dealership in the group. Tom Dunn was appointed as a new service manager for Sharpe BMW. He was appointed to increase the revenues and the customer satisfaction index. The director of service dealership Bob Deshane submitted a plan to correct this issue and that plan was handed to Dunn and he was required to implement it. This plan would initiate a massive change in the entire organization. Sharpe BMW was considered as a leader in the dealership industry and its competitors Lansing and Kalamazoo were not as big as Sharpe BMW. The company offers Virtual service department and cars of certain customers are picked and brought back and they don’t have to worry about that. Company generates hefty amount of revenues through this.

Service departments of BMW are growing rapidly and two types of jobs are performed in Sharpe BMW’s service department the customer pay and the warranty pay.  The customer pay is charged when the customer pay for the repair after the warranty is expired. Similarly, the warranty pay is charged when the vehicle is still in the warranty period and hen BMW pays the charges to the dealers. The compensation plan of service technicians are dependent on whether they are working on customer pay or warranty pay. Customer satisfaction index was developed by BMW in order to check whether the customers are satisfied or not. The higher the score is the better it is for the dealer. Financial incentives are given to the dealer and an industry average is set for that. CSI for Sharpe BMW was below the national industry average. As the previous manager left both the revenues and the CSI were declining. The problem was the differential rate of compensation for the two jobs offered by the technicians. Good technicians are difficult to recruit in the industry and job switching is in full swing in this industry. Sharpe offers training and development and provides top notch equipment to them. But the technicians are facing problems of wage disparity and that’s why CSI is going down. A new plan was initiated by Deshane in which monthly bonus would be offered to a service technician is his individual CSI is above 91%. It’s a radical change in the dealership industry and experienced technicians liked this approach of the company. However, Dunn was worried that plan might not work properly and CSI might not increase.

Statement of problem

The organization is working quite well and the only problem they are facing is related to the compensation plan. They are facing a disparity between the customer pay and the warranty pay wages for technicians. Repair shops aren’t facing this that’s why their technicians are happily working on standard hourly rate. Sharpe BMW is facing this issue its revenues re and CSI are also declining.

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