Wally, Vijay, Sandra, and Consuela make up a software development team at Javasoft. The firm is considering implementing one of two incentive compensation schemes
In scheme A, each programmer receives an annual bonus if he or she meets all individual programming deadlines. In scheme B, members of the team share equally in a joint bonus if the team meets all of its product delivery deadlines. All four employees are equally talented but Wally is a slacker who does as little work as he can get away with. Which scheme might team members prefer? Which scheme will management prefer?
Team members (except Wally) prefer scheme A since it ensures that they are not denied the bonus because of one slacker. Team-based pay is only effective when the product is truly a team effort. In this case, scheme B may cause some resentment among team members especially since Wally is likely to be a "free-rider." Management favors scheme B because it is tied to the firm's goal of product delivery.
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In the above figure, a minimum wage will not change the unemployment rate if it is set at
A) $6.00. B) $9.00. C) $12.00. D) Both B and C are correct because any wage rate that exceeds $9 per hour has no effect on the unemployment rate. E) None of the above because the minimum wage always affects the unemployment rate.
An upward-sloping supply curve suggests that producers
A) sell less at higher prices. B) sell more at lower prices. C) plan to sell more at a given, higher price. D) ignore marginal costs of production, and only focus on the demand for their product.
The marginal propensity to consume out of income
A) is larger than one. B) is equal to one. C) is smaller than one. D) varies around one.
An indifference curve shows _____
a. the relationship between total and marginal utility b. the relationship between the quantity of a good and the maximum attainable satisfaction c. the various combinations of two goods that give a consumer the same amount of satisfaction d. the relationship between the price and quantity of a good that a consumer is able to purchase e. that the quantities of a good that give a consumer maximum satisfaction are directly related to price