Business Case Study -- USA Motors

Why didn't the paid absence plan work?

The paid absence plan did not work primarily because it lent itself to abuse. Instead of providing incentive to give appropriate notice of absences, it allowed employees to exploit the mechanism as a means of increasing their pay. The main reason that was possible is that the paid absence mechanism would have required a corresponding increase in the organization's regulation and control of the other rules pertaining to absenteeism. For example, instead of imposing a mandatory requirement that any "discretionary" absences must be "use-or-lose" absences, the existing policy allowed them to be accrued and retained after the fiscal year. When combined with the fact that the organization already liberally allowed "unexcused" absences, that removed any possible incentive to "waste" any additional paid absences and created a very natural incentive to do precisely that: to accrue unused paid...
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