A payday loan company has decided to open several new locations in the city.To decide where to open these locations it hires consultants and pays them per store opened.At the end of the quarter,the company notices a many of the new stores' sales volume fail to meet expectations.To incentivize the consultants to instead focus on opening profitable stores,the company decided to alter the compensation to a percentage of the profit earned per new store.This puts the consultants

Question

​A payday loan company has decided to open several new locations in the city.To decide where to open these locations it hires consultants and pays them per store opened.At the end of the quarter,the company notices a many of the new stores' sales volume fail to meet expectations.To incentivize the consultants to instead focus on opening profitable stores,the company decided to alter the compensation to a percentage of the profit earned per new store.This puts the consultants

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By changing the compensation structure to a percentage of the profit earned per new store, the consultants' income will now be directly tied to the profitability of the stores. This means that if a store fails to generate a profit, the consultants will earn less or potentially even nothing as their compensation will be based on the profit earned. This is a more risky position compared to the previous compensation structure where they were paid per store opened regardless of its profitability.

​A Payday Loan Company Has Decided to Open Several New

A Payday Loan Company Has Decided to Open Several New