Charles Plant Goodman Barnes & Kim was created from the merger of three companies ten years ago. Goodman was the king of the toilet industry in Canada; Barnes specialized in sinks; Kim was dominant in...

Executive Summary
The case is regarding a company Goodman Barnes & Kim, formed after the merger of three
companies namely, Goodman, Barnes & Kim. The three companies dealt in different products
elonging to the same industry i.e. health and sanitation. Goodman was the king of toilet industry
in Canada, Barnes specialized in sinks and Kim was dominant in the bathtub area. During the
year 2005, the performance of bathtub was bad and other products performed fairly well. The
company is well managed by five different managers, three of them belonging to the respective
product line and other two for research and administration. The product line managers were
ewarded with equal bonus during the year 2005 amounting to $85,000 per manager. However,
the company is able to foresee that they will not be able to increase the bonus for the year 2006.
The company has not prepared the budget for the year 2006, but the company will make use of
2005 figures to develop the new bonus structure. The company will go public in the coming one
year and is keen to revise its bonus structure. The given paper analyses the different bonus
options available with the company. The bonus or any reward system for any manager shall be
dependent on the performance of his particular division or department. This will result in
fulfilling the objectives of management or company i.e. profit maximization and meeting the
higher incentive objectives of employees as well.
Analysis of case
During the year 2005, the fastest growing sector of the business is sinks whose revenue grew by
20 percent, toilets grew by 10 percent and there was a fall of 5 percent in bath tubs. The main
problem identified in the given company is that it provides equal bonus to all the product
managers i
espective of the performance or profitability of their respective product. This
technique of bonus distribution leaves no motivation for the product manager to work better for
his division. All the product managers are getting the equal bonus; it implies that the manager
increasing the revenue by 20% and a manager decreasing the revenue by 5% are evaluated on the
same footing. There seems to be no incentive or benefit for the hardworking manager and his
team to work more or perform better because they will receive the same amount of bonus even if
they perform poor. So, they will not be motivated towards generation of high profitability in the
company. This technique of bonus distribution will hamper the long term results of the company
as there will be decline in the profitability of the company.
Particulars...