A Factory Owner Wants His Workers to Produce as Many

question 12

Multiple Choice

A factory owner wants his workers to produce as many widgets as they can so he pays his workers based on how many widgets they produce. However, in order to make sure that the workers do not rush and produce a large number of poorly made widgets, he checks the widgets at random during various stages of their manufacture. If a defect is found in a widget, the pay of the entire section of the factory responsible for that defect is docked. How is this factory owner seeking to solve the agency conflict problem in this case?

• A) by supplying incentives so the agents act in the way principal desires
• B) by ensuring that all workers co-operate to maximize the gains of their section
• C) by making the agents into principals themselves
• D) by maximizing the information that the principal obtains about the behavior of the agents

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Definitions:

Organizational Learning

The process by which an organization improves and evolves by acquiring new knowledge, understanding, and skills.

Leader Influence

The capacity of individuals in leadership positions to affect the behavior, attitudes, or development of their team or organization.

Direct Behaviors

Actions that are straightforward and clear in their intention or aim, without ambiguity.

Strategy and Programs

Refers to the planned set of actions and initiatives aimed at achieving specific organizational goals.