Midwest Toys

Answer: Midwest Toys




Midwest Toys: Evaluations, Compensations and Firm Objectives

Rapid development in technology has a major and ever growing influence in the toy industry. As such, Midwest Toys needs to embrace the new wave, if they are to remain relevant and competitive in the market. Undoubtedly, the firm needs to change in light of technological advancement, while retaining the philosophy it has always held in regards to its toys’ original character. Additionally, the company has to meet its clients ever changing needs.

The existing strategy is one of product development, but they need to change it to an innovative strategy if they are to meet their new goal. As part of the existing strategy, the company has been operating based on certain objectives for instance: inventing ten new toys annually, reinventing ten more toy on a yearly basis, increase its revenue by 15% each year and providing intellect and safe toys for all its users.

With plans to steer the firm to an innovative strategy, the company has come up with a new set of objectives that are all aligned the innovation direction. These include: enhancing convenience and attributes in not less than 20 products already in existence, launching 15 new toys that are palatable to new markets, getting a new team of customer experience support personnel and hiring new innovative staff. Other factors that the firm will need to put into consideration for the strategic plan to be a success are their evaluation and compensation approaches. These methods need to be fine-tuned to ones that are a bit more modern and results-oriented.

Linking Midwest Toy’s Compensation and Evaluation Methods to its Innovation Strategy

Hiring new staff will lead to the company transforming its technological and innovative capability. The firm also wants to retain its authentic product essence. In order to do so, they will need to retain its old employees given that these individuals have been behind the firm’s success so far. With effective training, the company can manage to bridge the gap between these two sets of employees.

The Compensation Structure

            The firm can divide its compensation plan into two: a fixed pay plan (30%) and a Variable pay plan (70%). For fairness, the Variable Pay plan can be evaluated both by individual efforts and team efforts towards achieving the new Innovation Strategy.

Evaluation Criteria under Team Efforts

Midwest Toys can consider factors such as total sales efforts by looking at the overall number of sales generated. They can weigh their competitiveness through conducting surveys to determine customer feedback. To determine if the strategy is cost effective, they can evaluate whether or not the manufacturing process has been lean. Additionally, measuring intellectual output in their products and services can communicate exactly what level of innovativeness the firm has been able to achieve.

Evaluation Criteria under Individual Efforts

Individual efforts need to be put into consideration and evaluated based on a given criteria. The firm can evaluate its staff’s innovative quotient, leadership skills, ethical conduct, and compliance to existing laws, interpersonal behavior as well as performance levels. All these are measurable aspects that have quite a high impact on the firm’s overall performance. If Midwest Toys has this amazing Innovation Strategy, but their clients report poor customer experience, then the firm might end up losing instead of gaining. By achieving on all these fronts, Midwest Toys will have successfully aligned vision, mission and values to its Innovative strategy.





Tsui, S. (2013). Relative performance evaluation and the use of discretionary bonuses in executive compensation.






 A company’s mission, vision and values must be aligned with the company strategy. Then each of the functional areas of the company have their own strategies that align with the overall company strategy. In this Assignment you will explain how a company can link their compensation and performance evaluations to the organization’s innovation objectives. Read the case study below, and respond to all the checklist items. 

Case Study: Evaluations, Compensation, and Firm Objectives

Midwest Toys is a toy maker that has as its mission, “Our purpose is to expand the minds of children 1 month–100 years old.” Currently they use a product development strategy, but believe that maybe they need to orient their company towards an innovative strategy.

Their current objectives are to:

Invent 10 new toys every year and reinvent at least 10 more.
Increase revenues by 15% per year.
Employ motivated and committed workers.
Provide safe and intellect expanding toys for everyone.
Midwest Toys has operated as a medium-sized company for about 20 years. Their compensation to date has been based on longevity at the company. The evaluations were performed by their managers after reviewing their results based on: (1) their influence on increased department product output (75%) and (2) increased department sales (25%) at the end of the year. With the increasingly mechanized and digitized toys, and now robotics involved in toy making, many employees have been let go or offered early retirement due to their obsolescence.

The new objectives in line with the new innovation strategy include:

- Enhance attributes and convenience in at least 20 existing products

- Launch at least 15 new products that appeal to new customers and new markets

- Develop 5 new markets

- Hire personnel that think innovatively

- Hire diverse support personnel and designers who are customer service oriented to support new products and markets

The 200 remaining employees are beginning to worry and feel their compensation and evaluation process needs an overhaul.

Explain how Midwest Toys can link their compensation and evaluations to the company’s new objectives and innovation strategy.
What methods of performance evaluation might they use? Why?
Scroll to Top
Scroll to Top