What Is the Problem with Paying Plant Managers in Multi-Plant

question 130

Multiple Choice

What is the problem with paying plant managers in multi-plant firms according to how much each plant produces relative to its capacity?

• A) Managers in low-cost or high-capacity plants could be penalized, in percentage terms, for their overproduction.
• B) The production problem in multi-plant firms is usually how to lower production to increase market power, not how to increase production.
• C) Managers in high-cost or low-capacity plants could be penalized for production constraints over which they have no control.
• D) Managers would have an incentive to understate the productive capacity of their plants.
• E) Managers would have an incentive to overstate the productive capacity of their plants.

---

Definitions:

Team Design

The process of shaping a team's structure, roles, and dynamics to optimize its performance and effectiveness in achieving its objectives.

Reward System

A Reward System is a structured plan designed to incentivize and acknowledge employees' performance, behavior, and achievements.

Team Performance

It refers to the effectiveness and efficiency with which a group achieves its goals and objectives.

Intrinsically Interesting

Having inherent qualities that naturally arouse curiosity or interest without external incentives.