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How do rewards influence manager actions?

During the late 1970s, Harley-Davidson, the motorcycle manufacturer, was losing money and was very close to bankruptcy. Management believed that one of the problems was low productivity and as a result, asked middle managers to speed up the production. The employees who made the motorcycles were told that the priority was to get the motorcycles made and shipped on schedule, which was usually very tight. Middle managers were judged by their ability to meet shipment schedules.

a. What is the rationale that would lead to a desire to speed production in the face of increasing costs and declining productivity?

b. What type of behavior do you this performance measurement system would create in the sense of the priorities that middle management would establish for the production process?

c. What type of problems would this performance measurement system create?

d. How, if at all, would you modify this system?

Solution Preview

a. The rationale might be to reduce the cost per unit. The faster you make it, the less labor per unit.
b. This type of thinking would result in the team wrenching out any cost they can possible think of! So, they might even be tempted to override some design ...

Solution Summary

Response is 190 words in everyday language that explains how rewards likely influenced decisions that impacted results. Suitable for novices.

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