Final answer:
Jonathon Manufacturing is using a Market-based compensation approach by offering 15 percent more pay to attract and retain employees, ensuring competitiveness in the labor market and possibly optimizing operations through increased worker productivity with additional machinery.
Step-by-step explanation:
In the scenario where Jonathon Manufacturing decides to offer its employees 15 percent more pay than its competitors to attract more workers, the type of compensation decision illustrated is b) Market-based compensation. Market-based compensation strategies involve setting pay levels that are competitive with the external labor market. This approach is used to attract and retain employees by offering them pay rates that are at or above the average rates offered by competing firms in the same industry.Furthermore, the decision to use more machinery and offer higher wages may also indicate a move towards increasing productivity. By pairing higher wages with greater physical capital, such as advanced machinery, the firm can leverage the skills of fewer, but more productive, union workers. It is a business strategy that could optimize the firm's operations, although it may lead to employing fewer workers overall.