1) What is empowerment at VDS?
At VDS empowerment fits with the original management philosophy at VDS, which held that everyone could share in the profits of the organization and take a personal responsibility in helping the company find success. In their original document, management define empowerment as “developing a knowledge base in each employee that enables them to take action and make decisions consistent with the company's strategy and values.”(Baker 7).
2) Why does VDS use such aggressive performance pay? (Meaning, what is their rationale for their compensation strategies?
VDS' rationale for their compensation strategies was that they want people working for their organization who will put in what they expect to take out of it. So they keep base salaries low but offer commissions at graduated rates, which means that average pay is often above industry standards.
3) What do you think of the policy of paying low base salaries? Do you agree with Tyson that they only lose people they don’t want anyway?
I think that their strategy fits the type of flexible employee they believe would fit well in the company culture. They may be forced to forego hiring talented salespeople whose strength may be in relationship sales, for example, but who may have a family and could not affort the financial risk to agree to such a low base pay starting out.
4) Do you see any problems with the performance pay at VDS? The performance pay is not linked to performance reviews in any fashion. This may be a disincentive for some units of the organization to fully integrate the needs of the company with their objectives, since not all units feature a very low base salary. There also could be behavioral problems in the management units that go unresolved due to the fact that performance reviews have no effect over compensation.
5) PDM is struggling. What changes should be made with regard to “empowerment” and compensation to help this division succeed? In this case, the PDM unit is crippled by ineffective ability to empower themselves. The PDM unit does not have a fully integrated business plan to pull from the resources it needs. Empowerment should apply to all management units of the organization, whether they are profitable during the current time horizon or not.
Works Cited
Baker, George P. VDS Design Systems.. Case Study. Boston. Harvard Business Publishing, 1995.
