The Effect of a Skill Parameter in Formulating an Incentive Plan Outport Fishery Products is a large integrated fish-products company. The company operates its own fleet of fishing trawlers, whose catches are processed in one of the company's 1 1 processing plants. The final prodqcts are sold internationally under the company's brand name Bye-the-Sea.

Because of the demand for sea products and the limitations on the amount of fish that can be caught and processed, the company can sell as much fish as it can produce.

Many of the processing plants are located in depressed areas, and employment in the plants is highly valued. One of the most prestigious and skilled plant jobs is filleting, the process that separates the flesh of the fish from the bones. In filleting, the two fillets ( one from each side) must be removed from the spine of the fish in whole pieces, because whole fillets command a large premium over broken pieces. Also, the cut seperating the flesh from the bone should be deep enough that a minimal amount of flesh is left on the bone, yet shallow enough so that no bones remain in the fillet. Leaving flesh on the bone results in a loss of salable product. Leaving bones in the fillet requires indirect labor to remove the bones from the fillet. For this reason, the skill exercised in the filleting operationis a significant determinant of the value of the final product that is derived from a given catch (the others are the size of each fish and the species of fish). Skilled filleters are highly paid.

Required How would you evaluate the performance of the filleters, and how would you pay them?