Motivation

Below is an example of a pay structure commonly used in the mechanic division of the automotive industry. Using this pay structure, you will practice analyzing a real system for strengths and weaknesses and identify improvement strategies based on reality. You will need to look beyond the obvious and take a true managerial perspective. Remember, life is complicated and filled with necessary trade-offs. Focus on how this system likely affects the majority of people based on theory–don’t get hung up on the small group of people who may have unique reactions to situations.

Papers should be 2-3 pages (double spaced, 12pt, Times New Roman, indented paragraphs, no spaces between paragraphs, and 1-inch margins).

Directions

Read the pay structure description carefully. It’s complicated and may take some thinking to understand how it actually works.

After studying the pay structure described below, apply the expectancy theory to analyze the pay structure in terms of motivation. Explain the motivational properties of the pay structure, based on expectancy theory’s model. Make sure you are justifying your analysis using both the theory and specific details of the pay structure. Excellent analyses will integrate at least one other motivational concept or theory into this part of the analysis.

Next, identify two major problems with this incentive structure (hint: the problems are not related to the difficulty of motivating certain employees). Consider the fundamental assumptions built into the pay structure that may not align with reality but are necessary for the system to work AND consider reinforcement theory. 

Finally, for each of the two problems that you identified, outline a strategy to address that problem. The strategies should be realistic and address the fundamental problems you identified without creating more or worse problems than the one you are solving. Provide enough details of your solutions that a naive manager would understand what they should do and justify your solution well enough that a manager would understand why you are making these recommendations (i.e., it is clear WHY these solutions would be likely to work).

Description of Mechanic Pay-structure in the Auto-industry

The Automotive Repair Industry uses a pay-system referred to as the "Flat Rate" system. In the "Flat Rate" payment method, an automotive technician’s hourly pay-rate is determined by the type of work they do, as well as their certification level.

Each task a technician does (e.g., change oil or replace a transmission) typically takes a certain amount of time—basic tasks should be performed quickly, while complicated tasks will take longer. Technicians are paid based on how long a task typically takes, rather than how long it actually takes. A flat-rate hour is based on each “hour” of tasks the technician is assigned, rather than each hour the technician is in the garage. To elaborate, an oil change may pay a flat-rate of .3 hrs, so a technician would earn a “flat-rate hour” of work if they completed 3 oil changes. Because an oil change typically takes 20 minutes (.3 hours), a technician will be paid for 20 minutes of work whether it takes them 10 minutes or 40. If a car is brought in needing an oil change (.3 flat-rate hours), a tire rotation (.3 flat-rate hours), and their engine drive belt replaced (1.0 flat-rate hours), the technician would be compensated a total of 1.6 flat-rate hrs at their hourly rate for completing these 3 tasks, regardless of the amount of time (s)he spends working on the vehicle. A technician who performs these tasks in 45 minutes (.75 hrs) would still be paid for 1.6 hours. With this style of pay-structure, a good technician can be paid for 20 hours of work after completing an 8-hour workday.

How much a technician is paid per flat-rate hour is determined by their certification level, which indicates skills and expertise. There are four different areas of vehicle repair that a technician can get certified in, and four levels of certification within each area: Certified, Expert, Master, and Master Diagnostic Technician. To achieve the first level, “Certified,” a technician completes online and in-person (“hands-on”) training, and then passes the related ASE certification tests. They can do this for each of the four areas of vehicle repair. After "certified" status is achieved in a specified area of vehicle repair, the technician can advance to "expert" level certification after 3 years of work experience in the field. A technician advances to “Master” status after they have achieved “expert” status in all 4 areas of vehicle repair—including passing all 8 certification tests—and have at least 5 years (total) work experience in the field. Finally, Master technicians can complete the ASE “L1” advanced diagnostics test and achieve the level of "Master Diagnostic Technician.”

The tasks a technician is qualified to work on and their hourly pay rate is dependent on their certification level. Technicians who have achieved “certified” status are only qualified to work on simple tasks and may only make $17 per flat rate hour. A technician that is "Master Diagnostic" certified can work on any vehicle and any task coming in the door and may make up to $25 per flat rate hour. Thus, base pay increases each time a technician achieves a new certification level within any of the four areas of vehicle repair, as does the number of tasks the technician is qualified to complete.