4/28/2015

EDUARDO CUANO CASE

INCIDENT
Compensation Administration Movement

MGT 133 Section T

Group 2 members:
ENCISO, BERNADETTE
GARMA, SAMANTHA
LEMENCE, ALLEN LEMUEL
MICOSA, MIRIAM
ZOSA, CARLO

PROF. NOHREEN ETHEL P. MANIPOL

Department of Agribusiness Management and Entrepreneurship
College of Economics and Management
University of the Philippines Los Baos

Point-of-View
For this case, the group shall take the point-of-view of Chembags Manufacturing
Corporations human resource manager since it is the position that would best address the
identified root cause of the problem.

Definition of the Problem

The root cause of the problem would have to be the compensation given to Eduardo Cuao.
This led to the decline of Eduardos performance due to his dissatisfaction of the said
compensation administration, which eventually affected the whole performance of the production
line of Chembag Manufacturing Corporation.
Who: Eduardo Cuao
Where: Production line of Chembag Manufacturing Corp.
When: the time when Eduardo Cuao was appointed as the temporary production foreman
What: the decline of Eduardo Cuao and change in attitude, particularly in dealing with his job

Possible Causes of the Problem

One possible cause of the identified problem would be the lack of training in handling
people. This would also include having no formal training and orientation about the job that
Eduardo was promoted to. This would be because he was promoted right after Candido was sent
to the hospital.
Another potential cause of the problem would be that Eduardo was directly promoted as
the acting production foreman without even conducting a proper performance evaluation and
screening of other possible candidates for the position.
Next, would be the possibility that the compensation administration of Chembag
Manufacturing Corp. was not that inclined to the effort exerted by Eduardo, this would include the
lack of overtime pay, which is one of the factors for his demotivation and discontent. This would

mean that the compensation administration observed by the company was not effective in
Eduardos case.
Lastly, would possibly be the physical condition of the workplace or the production line
itself. This could be a reason why Candido Lukban was taken to the hospital, given that the
corporation deals with the processing of mats and plastic sheets.

True Cause of the Problem

Based on Figure 1, the group was able to come up with the true or root cause of the problem,
which is having unjust or unclear compensation administration applied to Eduardo. This branched
out to other problems that the corporation experiences.
Based on the problem flow chart, it can be noted that when Eduardo Cuao was promoted
as the acting production foreman of Chembag Manufacturing Corp., he experienced unjust
compensation administration, which eventually led to his demotivation to do the tasks of his new
job. Such negative change in performance led to greater effects to the whole production line of the
corporation, where in the total performance of the production department declined as compared to
its performance three months before. The people in the department also experience general air of
discontent. As stated in the case, the quality of the corporations products also suffered, which
even resulted to a reject in one of their shipments, which could translate to loss in their sales. This
would mean that the compensation administration of the corporation, particularly to that of
Eduardo, greatly affected not only the production situation of the firm but also to the potential
sales that they could have earned.

Eduardo was promoted as production foreman

Unjust/Unclear
Compensation
Administration to Eduardo

Eduardos demotivation and dissatisfaction to

work as acting production foreman

Production began to slip

General air of discontent is

observed in production department

Quality suffered

Production rate decreased to

about 12% than 3 months ago

A whole shipment was turned down

Loss in Sales

Figure 1. Problem Flow Chart

Formulation and Evaluation of Alternative Solutions to the Problem

Alternative Solutions:
1. Change the compensation administration of Eduardo.
Changing Eduardos compensation administration would mean that he will receive just
compensation that would be in line with his work and effort exerted for the benefit of the
production line, as well as the corresponding overtime pay and other benefits, if any. This
alternative can also serve as a benchmark or guide for future events that will be similar to this one
for the corporation to be ready on what to possibly do and what to implement.
Pros
a. Eduardos problem will be solved.
b. The corporation will most likely know what to do in case anyone will experience similar
or the same problem faced by Eduardo in the future.
c. Performance of the production line will most likely improve now that Eduardos problem
will be addressed.
d. the general air of discontent in the department Eduardos heads would dissipate or be
declined.
Cons
a. Changing Eduardos compensation administration would incur additional costs to
corporation.
b. Worst case scenario would be that such action would lead to jealousy between Eduardo
and his co-workers.

2. Conduct proper performance evaluation

In conducting a proper performance evaluation, this would imply that Eduardo Cuao
would be demoted from being the acting production foreman. This would then lead to the proper

screening of the potential temporary production foreman, given that Eduardo is just one of the top
men of the their department and not necessarily second in line to the position of Candido Lukban.
Pros
a. This way, there would be a thorough assessment on who will be the most appropriate
among the top men in the production line to act as the temporary production foreman
during Candido is in the hospital.
b. There would be the possibility that Eduardos case would be avoided, which includes
the decline in the departments performance under his lead.
c. It gives equal opportunity to the other potential candidate for the temporary position.
Cons
a. It is time consuming.
b. It does not directly address the root cause of the problem and just the main problem at
hand.
c. Worst case scenario would be the possibility that Eduardo would still be the most
appropriate person to temporarily replace Candido, thus resulting to the current problem or
even having another one of the top men that could be having a much worse problem than
that of Eduardos.

3. Conduct proper training and orientation to Eduardo Cuao.

This would mean that training on personnel management or how to deal with people will
be taught to Eduardo Cuao in order to improve his people skills and communication. Training
would also include proper orientation and guidance on the job of being a production foreman to
better perform his new position.
Pros
a. Eduardo Cuao would be more competent and knowledgeable in his position as the
acting production foreman.

b. He will be oriented on what he should do and what is expected of him being the
production foreman of Chembag Manufacturing Corp.
Cons
a. It is time consuming, given that they need to address the problem as soon as possible or
immediate solution to the problem.
b. such alternative would imply additional costs to the corporation.
c. It does not directly answer the identified root cause of the problem, but it does address
the main problem.

Alternatives

Pros

Cons

Total

22

-1

Table 1. Evaluation of Alternatives

Decision and Recommendation

Based on the Pros and Cons formulated in part I and their assessment in Table 1, the
problem that would best address the root cause of the problem, with the intention of answering the
main problem as well, would be that of the first alternative, which is to change Eduardos
compensation administration. With the support of the alternatives explanation, it is expected that
Eduardos problem would be solved. This could be measured not only on the impacts of the
alternative to Eduardos satisfaction and motivation to do well in his temporary job but also
through the assessment of the production lines performance as a whole. The general air of
discontent in Eduardos department is also expected to decline or even dissipate throughout the
process. Moreover, through this case, the corporation will know what to do in instances where
such or similar situations will occur in the future.

Implementation Plan
For the conduct of the whole implementation plan, the people that would best implement
such plan would be the human resource manager since they will have the last say whether they
will allow such change in Eduardos compensation administration. The one that most likely to
benefit from the human resource managers decision would be Eduardo Cuao.
The implementation plan will bring its focus on changing the compensation given to
Eduardo as thoroughly explained in the part of the formulation and evaluation of alternatives and
the decision and recommendation aspects of the case.
The planned implementation would happened in the production line of Chembag
Manufacturing Corp. since it is where the problem began. The following step-by-step procedure
(How) is given in Table 2 with the corresponding people involved in each step and the time (When)
each step will be implemented.

Who
The one who
will implement
the approval of
the decision
would be that of
the human
resource
manager and the
person that will
benefit from
their decision
would be
Eduardo Cuao.
The people
involved in this
step:
a. Mr. Ventura
b. Eduardo
Cuao

What
Change the

Where

How

When

compensation
administration of
Eduardo.

Mr. Venturas
office

1. Mr. Ventura
will talk to
Eduardo about
his problems,
especially in
details to better
understand his
side and for

This would
happen the day
when Eduardo
went to Mr.
Venturas office
to talk to him
about going back
to his old job or

The people
involved in this
step:
a. Mr. Ventura
b. Human
Resource
Department,
particularly the
HR manager

Human
Resource
Managements
office

The people
involved in this
step:
a. HR manager
b. Eduardo
Cuao

Human
Resource
Managements
office

The people
involved in this
step:
a. Eduardo
Cuao

Production Line
of Chembag
Manufacturing
Corp.

The people
involved in this
step:

Production Line
of Chembag
Manufacturing
Corp.

further
assessment
about his
situation.
2. Mr. Ventura
will meet with
the HR
department to
talk about the
compensation
administration of
Eduardo.
Eduardos new
compensation
administration
will also be
discussed and
formulated in
this step.
3. Orient
Eduardo about
the agreed
compensation
administration.
This would also
imply that his
past unpaid
overtime hours
will also be
compensated.

the possibility of
him quitting his
job.
This will happen
at the same day
when Eduardo
went to Mr.
Venturas office
to have the
talk.

This would
happened the
day after Mr.
Ventura and
Eduardos
confrontation in
the formers
office and the
meeting of Mr.
Ventura with HR
department,
particularly
before he starts
his work at the
production line.
4. Implement the This would be
new
done the same
compensation
day when
administration to Eduardo is to be
Eduardo.
oriented about
his new
compensation
administration.
5. At the end of
This would
his term as the
happen after
acting
Eduardos term
production
as the temporary

a. HR
department

foreman, his
production
performance will foreman of the
be evaluated as
corporation.
well as its effect
to the whole
production line
of Chembag
Manufacturing
Corporation.
This would also
serve as a
benchmark for
future incidents
that will be
similar to this
case.
Table 2. Implementation Plan

Contingency Plan
Problems that might arise upon the implementation of changing the compensation
administration of Eduardo Cuao, such as:
a. Incurring additional costs to the corporation that would hopefully be more beneficial
than just to settle for the other alternatives.
b. the alternative may give rise to other conflicts, such as jealousy between Eduardo and
his co-workers
If all does not go well with the first alternative, the corporation can resort to the next best
alternative, which is having proper performance evaluation among the top men in the production
line of Chembag Manufacturing Corp. With the support of its explanation, it is expected that such
alternative should lead to a thorough evaluation on who will be the most appropriate among the
top men in the production line to act as the temporary production foreman during Candido is in
the hospital. Moreover, there would also be a chance that Eduardos case would be avoided, which
includes the decline in the departments performance under his lead.