Case 1: Kilgore Bonus Program (Due by October 20, 2018) Everybody at Kilgore, a moderate- sized manufacturing company, is talking about the new incentive bonus program. Last August, John Marchant, CEO of Kilgore, announced a new program designed to encourage the best efforts of persons on the production floor. While production employees could count on regular pay raises as usual, Kilgore would now be offering a $5000 bonus to the top 10% of all production workers. Thus, of the 150 employees, 15 persons could expect to get a nice surprise just in time for Christmas. The reaction to Marchant's announcement was immediate, and mixed Clearly, there were a number of employees who liked the new bonus plan. In fact, a few persons laid bets on being among the top 10 percent. Sam Miller, Pete Cravens, Mike Sanders and Tom Reeves decided to pool their bonuses on a new fishing boat that the four of them would share, and they actually made a down payment on it in early November. Even Harvey Fried, who seldom spoke out anything, was overheard telling some of his friends about " ... how nice it will be to finally get some recognition for all my good work around here." Not all the talk, however, was positive. There were, of course, those persons who knew that they would never receive a bonus. They complained loudly and often about the proposed bonus plan and suggested any number of "better" uses for the money. For example, Frank Phillips thought that the money was better spent on underwriting dental insurance for everybody and Martha Renner thought the money would be better spent on day care benefits. Other employees had still other suggestions for use of the money. Even management reaction was split. The most vocal negative reaction came from Mark Brown, one of the more senior foremen at Kilgore. Mark said that he had seen incentive programs like this before on three previous jobs. He said that they never seemed to be fairly administered and, as a result, always caused more problems than they seemed to solve. Mark said, "Programs like tis never seem to work out smoothly. When people who expect the bonus don't get it, they just get angry and make life unpleasant for the rest of us. I wish we had never opened this can of worms!" In spite of the complaints, plans for implementing the new bonus plan were made. A new com- mittee, named the Employee Bonus Committee (EBC), was formed to choose the bonus recipients. This committee was comprised of five manufacturing managers. They were to make their choices based on supervisory ratings of employee performance. This was normal way of evaluating employ- ees performance. Supervisors normally made their ratings in late November, using Kilgore's standard performance appraisal form. Prior use of this form to assess performance has resulted in reasonably satisfactory results, although it appeared that some supervisors ignore the company's request to keep their aver- age ratings near the scale midpoint on the 10-point rating scale (1=poor performance, 10=excellent performance). Even training did not seem to help equate supervisors on the standards they used to evaluate their subordinates. For most part, however, this did not seem to cause any problems, since