If piece-rate or commission systems of compensating workers have important advantages for firms, why don't more firms use them? Some firms don't use piece-rate or commission systems of compensation because:

Question

Business

Dahlia Higgins

23 November, 13:59

If piece-rate or commission systems of compensating workers have important advantages for firms, why don't more firms use them? Some firms don't use piece-rate or commission systems of compensation because:

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Answers (1)

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Axel Wilkinson · Answer 1

Answer is option a.

Explanation:

Piece rate system or commission system is risky for the organizational profitability and also many efficient workers tends to leave the organization due to low incentives paid which is solely based on the amount of work done.

Piece rate system or commission based system is not preferred by most of the organizations due to following reasons:

It is risky for the organization as the total amount of output may not be enough to meet the goals set by the organization. Many productive and efficient workers tends to leave the company due to intense nature of the system solely dependent on the amount of output they produce in whatever time possible. This also tends to go against the just-in-time process of manufacturing as the inventory is held for so long in this system.