Suppose you run a company in an industry with a great deal of sales volatility. Some weeks are very good and some are very bad. Explaining why this occurs is difficult to do and even harder to predict. If you want to provide a work incentive to your employees, which incentive structure should you focus on when compensating employees?
A) hourly rates
B) tournaments
C) piece rates
D) corporate culture

Question

Quizplus · Accepted Answer

Tournaments would provide a strong incentive for employees to compete against each other to try to earn more compensation during the good weeks, while not penalizing them too severely during the bad weeks. Hourly rates, piece rates, and corporate culture incentives would not address the sales volatility issue and may not provide enough motivation for employees to perform at their best during the good weeks.

Suppose You Run a Company in an Industry with a Great