Currently XYZ's compensation system is such that only top managers receive compensation based on the company's performance,while everybody else in the company receives a fixed salary.Moreover,top managers have full discretion over the launch of new products.Due to the failure of the last three products launched by XYZ,top managers are contemplating modifying the allocation of decision rights concerning new products.What changes would make more economic sense?
A)Delegating decision rights down the ladder to those employees who are likely to have more specific knowledge and leaving their current compensation scheme unchanged
B)Delegating decision rights down the ladder to those employees who are likely to have more specific knowledge and changing their compensation by awarding them bonuses based on their performance
C)Leaving the allocation of decision rights unchanged,but changing the compensation of all the employees by awarding them bonuses based on their performance
D)Giving themselves good bonuses and reducing benefits for all other employees

Question

Quizplus · Accepted Answer

Delegating decision rights down the ladder to those employees who are likely to have more specific knowledge would be a sensible change as this would ensure that the decision-making is more informed and centralized. Additionally, changing the compensation by awarding bonuses based on their performance would incentivize the employees to make better decisions and work towards the company's success. This approach would not only improve the company's performance but also create an environment of motivation and trust among the employees. Therefore, option B is the best choice.

Currently XYZ's Compensation System Is Such That Only Top Managers