Jim Range owns a Best Ice Cream store, one of 1,000 franchises across the country. Jim doesn't like to work evenings, so he hires Mary Jo Smith to work the store in the evening for $6.50 per hour. Mary Jo's Friends come by each evening and she gives them free cones. Is this an adverse selection problem or an incentive problem? What is the solution?
Independence Burgers serves fast food at its 300 franchised outlets across the South. The chain has recently found that (a) people are upgrading to restaurants when they eat out, (b) government regulation of beef has been tightened, and (c) modern food preparation technology makes central commissaries more cost effective. What should Independence Burgers be thinking about doing with its organizational architecture?
Missy Knowles is in charge of all technical developments at Gumby Polymer Rubber. She makes all the choices concerning product innovations in the company. She finds that she is overworked and that several of her research chemists seem to be spending work hours playing gulf. What managerial advice would you provide to Gumby Polymer Rubber? Clearly explain your reasoning.
Decentralized decision-making is very controversial in a corporate environment. Central office managers feel like they are losing control of managers in specific plants or regional offices. What are some of the issues that must be reviewed before making the final decision on where to place final decision-making power?
Macrosoft is implementing a new research and design shop to integrate PC manufacturers' requirements for new computer software with Macrosoft's operating system. The process of integration usually requires five different kinds of software modification task, plus decisions about integrating these modifications. Discuss the problem of designing the new jobs in this research and design shop.
Enhanced Computers specializes in rebuilding computers. Recently reorganized into graphic divisions, the southern division headed by Dan Unowsky is outperforming the other divisions in sales and profits. However, corporate executives have noticed the Unowsky no longer send refurbished computers to other divisions, and he has instituted special warranties and pricing systems unavailable in the rest of the company. Should Unowsky be promoted or fired?
In the Bagby Copy Company case study, the executives are faced with wiring ten different copiers that they make in five separate European countries. They must choose between specializing by country or specializing by manufacturer of copier type. The executives hire a lobbyist to work for a standard regulatory and sales environment across the entire European Union. Why?
The owners of Market Analysts, a business and economics consulting firm, are big believers in paying benchmark competitive wages. They pay all (non-legally specified) compensation in wages. If the employee wants a benefit, the company has an insurance program but it comes out of the paycheck. Market Analyst tends to hire very young workers just out of college. They are energetic and work hard, but after two years they tend to leave for other firms, taking valuable training lessons with them. If Market Analysts want to keep its employees, what changes should it make to the terms of employment offered to new employees?
Explain the effect of self-selection on compensating wage differential.
What are the factors that favor high incentive pay for an employee? Explain which of the five factors is the most important. Now provide a detailed, expressive fictional story showing how this concept plays out.
The DuPont case is a good example of an incentive package gone awry. In review, it placed a portion of employee's pay into an "at-risk pool." If the division had exceeded expectations, the employees would have saved the DuPont bonus system?
A few years ago the state legislature of a particular state passed a bill that increased funding for only those public universities that showed an increase in graduation rates. In two years, the bill was retracted. Why was the bill enforced in the first place just to be withdraws so soon?