SCM 2601 Assignment Solutions on Stryker & Boeing Case Study


  • Topic- Supply Chain Management
  • Words- 1500

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Scenario: Alexis just began her final semester in college and is currently in the hunt for a job after graduation. Luckily for her, her college is going to be hosting its annual career fair next week. She has found a list of the employers that are going to be at the career fair and is now researching them to see which ones she might want to apply to. Alexis has a number of criteria that she feels are extremely important to her. One of these criteria is based off of what she learned in her performance management class. Specifically, she now strongly believes that a proper reward plan should not only compensate monetarily, but also compensate through other types of rewards and incentives. Two of the companies that she is really interested in are Stryker (Medical Technology) and Boeing (Aerospace). She finds the following information regarding each of the company’s compensation and reward plans:




Stryker advertises what they call a “Total Rewards Program” that is superior to its competitors. It entails monetary compensation, benefit compensation, and rewards. In fact, Stryker specifies that its compensation to employees is approximately 65 percent cash compensation, 20 percent health and well-being benefits, 10 percent savings and financial benefits, and 5 percent additional rewards.


This is broken down in the following way as presented by Stryker:


Cash Compensation


If Stryker is successful, so are our employees. We give you the opportunity to participate in the Company’s success through:

  • Competitive salaries
  • Incentive-based compensation
  • Commission plans for sales employees


Health and Well-Being


Medical and Prescription Insurance


We offer competitive plans with reasonable premiums and co-pays. United Healthcare administers healthcare benefits for most of our employees. Other carriers include Kaiser Permanent in certain zip codes of California and Hawaii, Anthem and Blue Cross/Blue Shield of Massachusetts in the Northeast United States and Blue Cross/Blue Shield Alabama.


Dental Insurance


We provide comprehensive coverage through Delta Dental, including free preventative care such as regular check-ups and cleanings.


Vision Insurance


EyeMed Visioncare administers our vision benefits that include exams, contacts, lenses and frames.


Flexible Spending Accounts (FSAs)


FSAs help employees budget for out-of-pocket health- and day care expenses. FSAs also save you money on taxes because your contributions are deducted from your paycheck before taxes.


  • Healthcare Flexible Spending Accounts reimburse eligible medical, prescription, dental, and vision expenses for up to $5,000 per year.
  • Day Care (Child and Adult) Flexible Spending Accounts reimburse eligible day care and elder care expenses for up to $5,000 per year.

Employee Assistance Program


We offer confidential, professional counseling to employees and their families at no cost.


Onsite Fitness Centers


We provide well-equipped fitness centers in most locations.


Wellness Programs


We offer many wellness services and programs to encourage and financially reward an active, healthy lifestyle.


Paid Maternity Leave


Adoption Assistance


We provide employees up to $5,000 per adopted child for up to two adoptions.


Long-Term Care Insurance


This voluntary plan offers affordable coverage for extended care expenses should an employee or a family member need extended care for a long-term, chronic illness or injury.


Company-Sponsored Athletic Teams and Activities


We also offer a variety of location-specific benefits.


Savings and Financial Benefits


401(k) Plan—U.S. and Puerto Rico Employees


We are committed to helping our employees save for retirement. Our U.S. 401(k) Plan allows you to contribute on a before-tax basis through automatic payroll deductions. Stryker adds to your savings with matching contributions, so when you contribute at least 8 percent of your pay, you receive the maximum company match. The Plan also provides for a discretionary employer contribution on top of the match—regardless of how much an employee contributes. For the past 20 years, the discretionary contribution has been 7 percent of eligible pay. The Company provides eligible employees with a summary plan description of the 401(k) plan that explains the key details. (Note: The Plan for sales employees and the Plan in Puerto Rico have different company contribution levels.)


Discounted Employee Stock Purchase Plan


Employees can purchase Stryker stock at a 5 percent discount through after-tax payroll deductions. You can also make monthly purchases without paying commissions and maintenance charges.


Short-Term and Long-Term Disability


We offer short- and long-term disability coverage at a percentage of your pay up to the plan maximum. Short-term disability lasts up to 180 days at either 60 percent or 100 percent of your wages, after which long-term disability begins at 60 percent of your wages.


Life Insurance


We provide our employees group life insurance and basic accidental death and dismemberment coverage equal to their annual benefit salary at no cost. You can also purchase supplemental coverage and dependent life insurance.


We also offer a variety of location-specific benefits.


Additional Benefits


Paid Vacation and 11 Paid Holidays per Year


Service Awards


We reward you for years of service and perfect attendance.


Performance Awards


We reward employees who deliver outstanding performances in a variety of ways, including employee of the month awards; annual performance awards; and function-specific awards in HR, IT, Operations and Sales.


Tuition Reimbursement Plan


We support our employees’ career aspirations and personal educational development. Our plan helps employees pay tuition while attending school part-time.


Employee Referral Program


We encourage employees to refer qualified candidates and compensate you when that referral results in a valuable addition to the Stryker team.


National Employee Discount Programs


We have agreements with national companies that allow our employees to purchase products and services at discounted rates, such as computers, automobiles, phones, and more.


Holiday Gatherings and Summer Outings


Onsite Cafeterias


We also offer a variety of location-specific benefits.




Incentive Plan Summary


This summary describes certain highlights of the Employee Incentive Plan (EIP). All details and governing provisions of the Plan are set forth in the official Plan document. If there is any conflict between this summary and the official Plan document, the official Plan document will be the controlling document in every case.


The EIP, as an incentive program, provides cash bonuses of between 1 and 20 days of additional pay to eligible employees if the Company achieves annual economic profit objectives.


  • Currently, more than 114,000 nonexecutive employees are eligible.
  • First payment occurred in the first quarter of 2001, based on meeting economic profit targets for the year 2000.
  • Targets are very demanding and track with our goal to provide total shareholder returns within the top quartile of S&P 500 companies.
  • Meeting the annual operating plan target for economic profit will result in two weeks (10 days) of extra pay. Exceeding the target will earn up to four weeks (20 days) of extra pay. Achieving economic profit levels below the operating plan goal but above a target minimum will pay between one and nine days of extra pay. If target minimums are not met, no payments will be made.
  • Economic profit targets are considered material information and will not be made public. However, progress toward the targets will be tracked quarterly and reported to employees following each earnings release.
  • Employee eligibility for subsidiaries and selected smaller sites will be considered on a case-by-case basis.


Improving Performance


A high-performance culture is critical to our future. We want our employees to be actively engaged in seeking customer-focused solutions to grow the business and boost economic profit. We will generate shareholder value and boost economic profit by focusing on the key aspects of our business identified in Vision 2016. In our daily efforts, we can enhance shareholder value by


  • Improving quality and customer satisfaction.
  • Trimming cycle times.
  • Reducing costs.
  • Streamlining processes, and more.




We all make decisions that affect the Company’s revenues, costs, and use of assets. The Employee Incentive Plan asks for employees’ commitment to think and act like owners of the business—and gives them a direct stake in that success. Objectives of EIP include


  • Share Boeing’s financial success.
  • Motivate employees to focus on specific performance objectives.
  • Reward employees annually based on overall Company performance.


Assigned Questions:


In addition to this information, Alexis found out that Stryker pays its first-year employees approximately $58,000 in starting salary and that Boeing provides its first-year employees with a starting salary of $65,000. Based upon this information and the additional information that Alexis has gathered, compare and contrast these two company’s incentive plans.


Specifically, address the following questions:


1. Compare and contrast these two programs.Does each company offer a true contingency pay plan? If so, what types of contingency pay systems do they advertise?


2. Do you get the impression that each company’s reward system is achieving important strategic objectives? What   company do you think does a better job of implementing its reward system and why?


3. Which company do you feel offers the better pay and reward plan to its employees and why?


4. If you were in Alexis’s position, what company would you prefer to work for and why? Be sure to include a summary of your thoughts


Write your paper comparing the two companies that addresses the four questions, making the paper a minimum of four pages.  You must provide at least two references for each question from your learning this semester about performance management. You are free to do additional outside research and include any relevant information on both Stryker and Boeing


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