Rko Time Warner

Executive Summary

RKO Warner Video is currently a very centralized organization located in a relatively compact area. As the company grows, it must make sure that the organizational architecture grows with it. The senior management team is going to have to power decisions down to lower levels as the company expands. Having the right people in place to make these future decisions is vitally important to the health of the organization. We feel that the proposed incentive plan differentiates good managers from bad managers. The plan provides incentives to improve the current performance of the stores. The plan also serves to attract and keep quality employees for the future growth of RKO Warner Video.

We propose a mixture of a subjective plan based on day-to-day responsibilities such as alphabetizing the racks, store cleanliness, opening on time, etc with an objective plan based on total revenues generated. This mixture ensures that managers are doing what needs to be done to take advantage of what management sees as RKO Warner Video’s competitive advantage in service and selection, while at the same time allows talented managers to be creative and try to increase total revenues.

We propose a subjective plan where District Managers set objective goals and also subjectively evaluate their district stores along with others to arrive at a base bonus. If the base bonus is achieved by stores, then an additional bonus can be earned based on achieving revenues above targets.

Summary

RKO Warner Video is a subsidiary of RKO Century Warner focusing on the videocassette retailing and rental industry in the New York Metropolitan area. RKO Warner Video is growing and CEO Michael Landes wants to ensure his vision is being implemented down the chain of command. To ensure this happens Michael Landes hired a consulting firm to work with RKO Warner Video President Steven Berns and Vice President of Operations