Question: You are the manager of the maintenance department of a hotel. You are paid a basic salary, plus a bonus. The bonus consists of another $1,000 each time your expenses are under budget, plus 2% of the amount you are able to save. For the past six budget periods, the following are the results. Note that U stands for unfavorable, or over budget, and F for favorable, or under budget.
a. Using this information, as a rational person what would you do if you were the department manager running the maintenance department over again from period one? Use a numerical example to prove your point.
b. If you were the hotel's general manager, what would you recommend be done, if anything, to this hotel's maintenance department's bonus system?