Question

Safelite Glass Corporation has workers that install glass on automobiles. The company changed its compensation from paying auto glass installers an hourly wage to a piece rate system. Do you think this benefits Safelite Glass? Do you think this benefits the auto glass installers? Why?

Answer 1

The new system was instituted because management believed that productivity was below what it should have been. Productivity could have been raised by requiring a higher minimum level of output under a time-rate system, coupled with a wage increase. However, since workers have different preferences, such a change might not be acceptable to all workers and might induce massive turnover. The firm therefore adopted a piece rate system, which allowed those who wanted to work more to earn more, but also allowed those who would accept lower pay to put forth less effort. The output measured used is units-per-worker-per-day.

Hence, it was beneficial to both Safelite Glass and auto glass installers because of the productiveness for the corporation and efficiency and effective wage for work.