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Compensation

George Milkovich, Jerry Newman, Barry Gerhart

Chapter 9

Pay-for-Performance: The Evidence - all with Video Answers

Educators


Chapter Questions

06:01

Problem 1

A father decides to put his two sons to work landscaping. The business involves going to a customer's home and providing landscaping services (cut grass, edge sidewalk, pull weeds in flower beds, prune bushes and trees, rake leaves). Rather than paying a flat wage, the father decides to pay an incentive according to the following schedule (average across all lawns).
$$
\begin{array}{lclcc}
\hline & \begin{array}{c}
\text { Piece Rate Incentive } \\
\text { per Person }
\end{array} & \begin{array}{c}
\text { Physical Effort }
\end{array} & \begin{array}{c}
\text { Time to Complete } \\
\text { per Person }
\end{array} & \begin{array}{c}
\text { Charge to } \\
\text { Customer }
\end{array} \\
\text { Cut grass } & \$ 4 & \text { Easy } & .4 \mathrm{hr} & \$ 30 \\
\text { Edge sidewalk } & \$ 1 & \text { Easy } & .1 \mathrm{hr} & \$ 5 \\
\text { Pull weeds } & \$ 6 & \text { Very Hard } & .5 \mathrm{hr} & \$ 40 \\
\text { Prune bushes, etc. } & \$ 5 & \text { Hard } & .5 \mathrm{hr} & \$ 30 \\
\text { Rake leaves } & \$ 5 & \text { Hard } & .5 & \$ 25 \\
\hline
\end{array}
$$
At the end of the second week under this arrangement the boys are quarreling with each other and not happy with their dad. All of the disagreements revolve around the incentive system. What might be the problems?

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
01:51

Problem 2

Father Michael's Wraps (pitas, wraps, flat breads) is experiencing turnover in the range of 100 percent. Most of this occurs in the first 18 months of employment. How would you determine if this turnover rate is high? How would you justify to your boss that lower turnover is strategically important? What would you look at in both pay and other forms of rewards to identify ways of reducing turnover? Justify your choices based on your reading of this chapter.

Sheryl Ezze
Sheryl Ezze
Numerade Educator
01:46

Problem 3

Restco Products makes pillows and blankets specifically for passengers on airliners. For the past 15 years, profits in the airline industry have been hugely variable, partially because of labor unrest, gas prices, $9 / 11$, and so on. Restco has been tinkering with other kinds of "nap" opportunities tailored to rest homes and senior citizens in general. This experimentation makes current strategic objectives and goals quite ambiguous. What would you suggest would be a good compensation mix given this constellation of factors?

Adriano Chikande
Adriano Chikande
Numerade Educator

Problem 4

Companies focus heavily on cost-saving strategies to be competitive today. Identify both monetary and nonmonetary ways of cost saving that would be relevant to a compensation person's job.

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Problem 5

You supervise in a company that is a low payer relative to competitors. What things do you have control over to increase the likelihood that workers will feel fairly treated?

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