Question

Isidora likes the results obtained when the employees at her small pharmaceutical company work in teams. Unfortunately, Javier, undeniably the most talented researcher in the firm, feels he is not being recognized or sufficiently compensated for his contributions within the team framework, and Isidora realizes that he is probably right. How can Isidora structure salaries to encourage teamwork while retaining top performers like Javier?Begin paying each employee the same hourly wage.

a. True
b. False

Answer 1

Isidora should not pay each employee the same hourly wage; instead, she should adopt a mixed compensation structure with base salaries and performance bonuses to foster teamwork while rewarding high performers like Javier.

Step-by-step explanation:

The situation presents a classic challenge in compensation management within a business environment. Isidora needs to find a balance between encouraging teamwork and recognizing individual contribution to retain top talent like Javier. Relying on a flat rate of hourly wage for all employees would not serve this purpose as it ignores individual contributions, especially from high performers.

Instead, Isidora could consider implementing a mixed compensation structure that includes both base salaries and performance bonuses. Efficiency wage theory suggests that paying employees more than market rate can enhance productivity and loyalty, effectively benefiting the company in the long run. This approach would allow for team collaboration while still providing additional rewards to those who contribute significantly, like Javier.