Jones Ironworks Case

Jones Ironworks Case

1. I agree with some of the arguments that Freddie makes in support of a $10 piece rate. The payment system could be more effective because it would increase a worker’s incentive to produce efficiently by encouraging higher production. If an employee works harder, the employee will receive more money. For instance, in the other pay system, a worker could work inefficiently and get paid the same amount as a worker that was working efficiently. The new system will also lower the turnover rate and save the company money in training and outfitting new employees because employees will want to stay when they are receiving more money. However, there could be issues if every single worker begins to work harder, specifically if workers earn a significant amount of money more than their original earnings. Additionally, employees may begin to produce more than needed to meet demand because employees are trying to earn more by producing more.

2. I do not agree with Freddie’s father in some aspects. For example, reducing pay or keeping the current system will keep the turnover rate high, training costs high, and lower efficiency. Perhaps, the turnover rate will not decrease by very much, but it has to decrease a little bit because there is the possibility of earning more money. Also, since there is a steady stream of new applicants for foundry jobs every week, even though it is not an attractive job, there will always be workers that will appreciate the higher pay opportunity in comparison to lower pay for the same job somewhere else.

3. I would recommend that the piece rate system be implemented because there is no cost in implementing the new system. Also, the possibility of a lower turnover rate, higher efficiency, and costs savings in training are all important aspects of the business. If the new system is unsuccessful, then the company could