Training, Performance Management, and Compensation Challenges at Initech
Written by:
Dr. Michael Daniels, Dr. Sima Sajjadiani, and Dr. Rebecca Paluch
Initech is a technology company based in Burnaby, B.C. Initially, its primary focus was on
developing custom websites and web-based applications but it has recently expanded into
developing custom mobile apps for other companies (e.g., point-of-sale apps for taking
payments and team communication apps used for internal purposes). Peyton and Quinn
founded the company right after they graduated from UBC in 2014.
Initech has grown rapidly since its inception in 2014 to about 80 employees today, employing a
number of developers and sales/customer service staff in addition to those specializing in
accounting, marketing, operations, and human resources (HR).
To compete in the competitive tech labour market in B.C., Initech markets itself as having a
fresh, dynamic, flexible, and fun culture. At Initech, work hours are flexible, there is no assigned
work station, and employees can decide where to sit or stand to work. There are couches
around the open space where the employees can even lie down and work. Employees can bring
their pets to work. They usually either eat at their desk while working or eat together in a
communal dining area. Sometimes, they even take a quick nap on one of the sofas in the
communal area. Employees work hard during the day and often socialize together in the
evening.
As a young company mindful of labour costs, Initech pays its developers about 20% below the
market rate. However, they recently incorporated a pay-for-performance incentive system, which
is meant to help close that gap while rewarding the most productive employees. As Initech
values collaborative work, its developers work together in teams of 5-10 members to complete
projects. At the start of the project, the team leader determines the length of time it should take
developers to complete their work, which average about 3-4 weeks each. Once they complete a
project, they move on to the next new project in the queue. At the end of each quarter,
developers are paid extra depending on the number of projects they completed and the total
number of days ahead of schedule they completed their projects. In addition, developers are
eligible for up to 5% annual merit increases. These are determined through an annual
performance appraisal conducted by managers, who rate each employee on the following
criteria: initiative, attention to detail, client service, and communication. Overall, with these payfor-performance schemes the total pay can be as high as 20% above the market rate.
Although Initech achieved an incredible amount of success in its early years, it has started to
experience some problems as it has grown in size and diversified into the mobile app space.
Recently, a handful of clients have reported that they were extremely dissatisfied with the quality
of the products they received. Some continue to encounter bugs in their software and complain
about the long turnaround times for them to be fixed. Others have complained that the apps that
were developed for them lack some of the functionality they expected or are not intuitive and are
difficult to use.
Given the huge demand for these services, new business continues to roll in, but developers
and account managers seem to be stretched too thin. For example, high performers are often in
the office over the weekends and may work 70-80 hours per week to finish the projects with no
break before starting a new project. Team members are reporting increased conflict and the
atmosphere in the office is tense. The stress/anxiety levels are very high and employees blame
each other for not finishing the projects fast enough. The number of new complaints coming in
from existing clients is increasing.
Given all these issues, management were concerned about the internal dynamics of its
workforce and the potential for all of this to start affecting business outcomes. The founders
thought that the main problem may be due to a skills gap in the developers because most of
them were hired to do website development but were now being asked to develop mobile apps.
To address this, a few months ago, they decided to send all of Initech’s developers to an offsite
2-day training program (Thursday and Friday) focused on updating the skills of the coders. In
addition to classroom instruction, which included new strategies for tackling software
development projects, developers get individualized coaching on their coding abilities. However,
during the subsequent months, the developers seemed even more stressed, the team conflicts
escalated, and a number of new complaints came in from existing clients.
YOUR CHALLENGE
Peyton and Quinn have hired you as their HR consultant. Your job is to evaluate this case
through a strategic HR lens, identify the HR problems and come up with realistic
recommendations to improve HR practices mainly training, performance management and
compensation plans for the developers in Initech. Your assignment is to provide the founders
with a 4-5 page report that documents the following:
Part 1: Problem Identification and Analysis
● Identify the main HR issues that Initech is facing? (at least 1 training issue, and at least 2
issues regarding performance management, and at least 2 issues related to
compensation/incentives)
● Explain why and how the issues you have identified contributed to the problems the
organization is experiencing?
Part 2: Supported Recommendations
● Propose at least one solution or strategy to address the training issue you identified?
● Propose at least one solution or strategy for each issue you identified regarding
performance management and compensation/incentives. Since these issues and their
solutions can be related to each other, feel free to integrate your solutions. In that case,
if you decide to propose one integrated solution that addresses more than one issue,
make sure you clearly explain how that solution might address all of the issues that you
have identified.
Important! For all proposed recommendations, you need to clearly explain why you think this
solution or strategy will improve the process.
Clearly justify and support all of your responses using readings, materials, and presentations in
this course and relevant academic research. Answers that are not supported by these sources
are not acceptable!
FORMAT INSTRUCTIONS:
You must type all of your responses using the following format:
Layout:
● Paper size: letter (8.5 by 11 inches)
● Margin: 1 inch each side
● Font typeface: Times New Roman
● Font size: 12 pt.
● Typographic alignment: align text left (do not justify text)
● Line spacing: double
Structure:
● 1,500 words limit (you must include a word count at the end of your paper)
● Clearly identifiable headings and sub-headings
● Cite all references and use APA format
Content:
● Although including outside research in your paper is not required, doing so can greatly
improve justification of your problem identification and/or recommendations.
SUBMISSION INSTRUCTIONS:
The deadline for submission is Sunday November 24th, 11:59 p.m.
GRADING RUBRIC
● Identification of the main problems or issues 5 points
○ Exemplary papers will identify and demonstrate a solid understanding of the main
issues and problems in the case.
● Analysis and evaluation of the problems/issues 10 points
○ Full points awarded to papers that present an opinion and supports it with
documented evidence and strong arguments. Analysis and evaluation should
present a balanced and critical view and have reasonable and objective
interpretations.
● Recommendations on effective solutions 10 points
○
Top reports will have well-documented, reasoned, and pedagogically appropriate
comments on solutions to all the issues identified.
● Links to course materials 10 points
○ Full points for papers that demonstrate research and support for solutions. There
should be clear references to course materials.
● Writing mechanics and paper requirements 5 points
○ Reports should use proper grammar, punctuation, and spelling. Students should
consider effective sentence and paper structures to make logical sense. All paper
requirements should be met.
TOTAL= 40 points