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Piece Rate System

The Green Show Company is considering going to a piece rate system, where manufacturing employees are paid based on their level of output. Discuss what factors the firm should consider in deciding whether this idea should be implemented. How should the initial piece rate be set? Under what circumstances should the company alter the piece rate once it is adopted?

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This type of system is usually used in low skill labor tasks and is usually used in foreign countries in what we think of as sweat shops.

Therefore we have to consider the level of skill needed to put the item together since this typically only works well for items that do not take a very long time to put together and where people would be able to put ...