Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 24

Performance Evaluation and Risk Aversion Jill Lewis is the office manager of PureBreds, Inc. Her office has 30 employees whose collective job is to process applications by dog owners who want to register their pets with the firm. There is never a shortage of applications waiting to be processed, but random events beyond Lewis’s control (e.g., employees out sick) cause fluctuations in the number of applications that her office can process. Jill is aware that it is important that the applications be processed quickly and accurately.

Alex Zale, the district manager to whom Jill reports, bases his evaluation of Jill on the number of applications that are processed.

Required

1.    If Jill is risk-averse, how should Alex compensate her? Why?

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2.    What is a disadvantage of an evaluation method that is based only on the number of processed applications?

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3.    List at least two ways that Alex could measure how accurately Jill’s office is processing the applications.

Step 1 of 5

Compensation Management & Business Valuation:

Compensation management is the demonstration of giving money related an incentive to a representative for the work they do by methods for an organization procedure or strategy. A few sorts of pay incorporate compensation, rewards, and advantage bundles. Organizations use remuneration the board so as to discover, keep, and spur representatives to accomplish quality work.