BUS4098 Week 4

Human Resource Decisions

An important aspect of this simulation is how it imitates labor markets. There are many important

aspects to the algorithm that the simulation uses, and some of them are worth discussing here.

First, the nonlinearity of all motivation tools is important. You discover that the responsiveness of the

workers to salary and piecework components of the compensation package is different and they have different impacts at different levels in each geographic area. To further enrich the situation, you have

to consider both the percentage and the actual relationship of the two types of compensation. The

impact on productivity in terms of the number of units and reductions in rejection rates is measurable

and should be a portion of your weekly analysis.

Second, there are two factors that drive the changes that compensation packages bring about in

worker performance:

The motivation of the workers you currently employ

The labor pool that is attracted to the �rm

We are aware of the �rst impact because we can easily see that in ourselves; a change in the way in

which we are compensated results in a change in the way in which we work. But, the second is also

important. Higher wages bring in better workers who, independent of the compensation mix, produce

more pairs of shoes and fewer rejections.