Consider a firm that has two types of employees in their marketing department with the following compensation structures. i. Sales staff that make "cold calls" to businesses to try and generate work for the firm. They are paid flat hourly wages and spend most of their time driving around to businesses to develop and curate those relationships. ii. A marketing manager that earns an annual salary, whose responsibilities are to manage the sales staff and develop a strategic marketing plan, while at the same time they make commission on the work that they bring in for the firm themselves. Based upon this description, for each type of employee identify a problem with
Consider a firm that has two types of employees in their marketing department with the following compensation structures.
i. Sales staff that make "cold calls" to businesses to try and generate work for the firm. They are paid flat hourly wages and spend most of their time driving around to businesses to develop and curate those relationships.
ii. A marketing manager that earns an annual salary, whose responsibilities are to manage the sales staff and develop a strategic marketing plan, while at the same time they make commission on the work that they bring in for the firm themselves.
Based upon this description, for each type of employee identify a problem with the incenctives provided by the compensation schemes and the nature of their responsibilities. Then provide a potential solution for each, based upon our discussions of incentive design and moral hazard.
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