Problem 1. Evaluate the following statement:
The overarching purpose of a measurment system should be to help a team, rather than senior managers, gauge its progress. A team's measurment system should primarily be a tool for telling the team when it must take corrective action.
Problem 2. The Green Shoe Company is considering going to a piece rate system, where manufacturing employees are paid based on thei level of output. Discuss what factors the firms should consider in deciding whether this idea should be implemented. How should the initial piece rate be set? Under what circumstances should the company alter the piece rate once it is adopted?
Problem 3. Your company currently has a bonus plan for its slaes managers. If annual sales for a nanager's unit exceed $1 million, the manager receives a $10,000 bonus. In a typical year, about 5 of the 10 mangers in the firm meet the target and receive the bonus. However, the number receving the bonus varies from year to year due to the state of the economy, which in turn has an evvect on sales. The company is considering repalcing the bonus plan with a plan that rewards the top-five selling managers each year with a $10,000 bonus. Dicuss the potential benefits and costs of the new plan relative to the old plan.
Problem 4. Communities are frequently concerned about whether police are vigilant in carrying out their responsibilities. Several communities have experimented with incentive compensation for police. In particular, some cities have paid members of the police force based on the number of arrests that they personally make. Discuss the likely effects of this compensation policy.