Discuss the effects of each of the compensation packages

Assignment Help Operation Management

Reference no: EM13225693

Assume the operations manager at the company you own prefers to put in low effort rather than high effort. In order the manager to exert high effort; his expected financial gain must be at least $60,000 higher than if he puts in low effort. You are evaluating three possible compensation packages:

•A flat salary of $300,000
•A payment equal to 5% of the expected profits from the profit center
•A flat payment of $200,000 plus 5% of any profits over $10 million.

a. Discuss the effects of each of the compensation packages on company profits and the behavior of the manager. What assumptions are needed in order to compare the expected values and risks associated with each option?

b. How would a risk averse versus a risk neutral manager view the different compensation packages?

Reference no: EM13225693

Questions Cloud

Bachelor in organizational management : Bachelor in organizational management

Which type of contract requires the least contract : Which type of contract requires the least contract administration during control procurement phase?

What can be done to induce fixed-price contractors : What can be done to induce fixed-price contractors to become more responsive?

Can the phase information be obtained from an oscilloscope : Construct a Phasor Diagram to represent the source voltage, source current, voltage drops, VR, and VL across the resistor and the inductor. The diagram does not need to be drawn to scale. However, the values of the items represented must be includ..

Discuss the effects of each of the compensation packages : Discuss the effects of each of the compensation packages on company profits and the behavior of the manager. What assumptions are needed in order to compare the expected values and risks associated with each option?

Explain assigning the electrons in nitrogen to sites : When we looked at assigning the electrons in nitrogen to sites in the 2s and 2p orbitals, we used the 2s anti-bonding site. Which statement about this site is not true?

Discuss at least two pricing strategies : Discuss at least two pricing strategies you can use to increase your revenues and analyze them in terms of their ability to generate additional profits. Indicate any additional assumptions you are making.

Do specify the requirements on the adc : A calibrated RTD with ALPHA = 0.0041/°C, R = 306.5 Ohms at 20°C, and PD = 30 mW/°C will be used to measure a critical reaction temperature. Temperature must be measured between 50° and 100°C with a resolution of at least 0.1°C.

All male athletes are self-centered and sexist : Alexis believes that all male athletes are self-centered and sexist. Her beliefs are an example of:

User Account

All Pages