Description
Did the bonus system of EUROCAP Bank work out well in practice? What are the systems’ weaknesses and/or strength? Analyze and comment specifically the system’s effectiveness in:
• linking pay to performance
• providing short-term and long-term incentives
• motivating employees beyond purely financial incentives
• retaining key employees and top talents
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EUROCAP Bank: Bonus System
The EUROCAP Bank bonus system in Japan did not work well in practice. The system
offered bonuses that demoralized and dispirited its employees. The system failed to work well in
practice due to the fact that it did not reward employees based on their individual performances
rather it was centered on team performance. For instance, the bonuses paid to paid in March
2000 for the year 1999 performance was lower than expected and also below the industry
payouts. The bonus system made it difficult for EUROCAP Equities Japan to recruit, motivate
and retain top talents since its competitors offered higher bonuses.
One of the systems’ weakness is that it bonuses were lower than the industry payouts.
EUROCAP Equity Japan bonus system paid 10-30% less in bonuses compared to the industrial
average. This made it difficult for the bank to poach top talents and experienced employ...
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