2. John is a car salesman working for a Chevy dealership in Houston, Texas. He r

Question

2. John is a car salesman working for a Chevy dealership in Houston, Texas. He receives a base salary of $800/month plus a 10% commission on the price above cost for every car that he closes a deal on. a. Describe a situation in which this payment structure incentivizes John to behave in ways the company would not find desirable. b. Based on your above answer, how could the dealership either change their payment scheme or introduce some company policy to incentivize John to behave in a way that is more profitable for the dealership?

Explanation / Answer

a.

In a given situation, John will attempt to offer just those models of auto whose cost is high. It will help John to get higher measure of motivation regardless of the fact that he offers one and only auto.

b.

Organization ought to likewise incorporate the procurement of offering number of autos in installment structure. For instance, on the offers of initial 5 autos = 5% motivator on costs above expense

Next, on the offers of next 10 autos = 10% motivator on costs above expense

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