ECN 340 Chapter : Why your boss is overpaid.docx

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The new bosses of the safelite glass corporation wanted to speed things up. Productivity at safelite soared under the new piece rate system, with work per worker increasing by nearly 50% Workers tried harder, slow ones quit, quality of product increased, number of botched jobs fell, more skilled workers made much more money and stayed with the firm. For most jobs, it is not easy to measure performance and pay accordingly. Example: you can"t check whether a fedex courier is smiling at customers even you can track the package. Such measuring problems make it very difficult for managers to assess performance. Sometimes there is just no way to tell the difference between a brilliant worker and a lazy charlatan. Mas and moretti tried to find out if people worked harder is surrounded but productive colleagues, they studied the performance of checkout counters workers. Should checkout counter workers be put on a piece rate system,

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