Case study: Using Compensation to Motivate Jon Wehrenberg is a businessperson always up to a challenge. Three years ago, a friend called and told Jon he knew of a large building products company that was looking for a domestic supplier of plumbing assemblies. The firm was currently importing products from Korea and was hoping to improve its turnaround time and quality. The deal was worth about $1 million a year to Jon's firm, Jamestown Advanced Products, if he could commit to producing and delivering the specified quantity of custom-order metal products every week. There was also one other stipulation: Jon's company would have to do the work at the same price the Korean supplier was currently charging. The challenge inspired Jon, and he carefully compiled the important financial information that was needed. He discovered that a pretax profit margin of 12% was possible, but only if he could keep direct labor expenses down to 11% of company sales. The problem he faced was obvious. The output per worker estimated was realistic but only if he had a work force that wanted to meet and sustain a high level of quality and productivity. The problem was many workers tend to be cynical about management and often lose their motivation if they see productivity increasing and they don't see any benefit to the gain. He decided the solution was logical and simple. In addition to a competitive base wage, he would pay the workers a quarterly bonus if workers could get the labor costs of the firm under 11%. Wehrenberg also agreed that at the end of each week he would provide information concerning sales totals, gross payroll numbers, or any other information workers needed to verify the efficiency of the system. He believed that it was possible over a period of time to get labor costs down to 9%, which would mean a quarterly bonus of $1,500 to each worker. Workers liked the idea and accepted the challenge. Jamestown Advanced Products agreed to a three-year contract to supply the building-products company. Please answer the following questions: What does Jamestown Advanced Products do to motivate people using money that other firms do not do? Can you see how money can be a motivator? What kind of workers would enjoy working at Jamestown Advanced Products and what kind would not? Can you see how productivity at Jamestown would increase as certain kinds of employees would self select themselves out of the company and others would come who fit the system better