You are employed by a Fortune $500$ company, based in Austin, working in their HR department. The company makes toys. Your specific role is to aid managers who are having difficulties. The CEO of the company has told one of the supervisors to come see you, because there is an issue with his department.

James comes to you because many of his employees have transferred out of the division or quit. When you ask James if anything has changed in his division to cause this, James tells you that he is not sure of the cause. If anything, he thinks his employees should be even more satisfied than before. James tells you that last month he decided to implement a new pay system for all his teams and also the team leaders. He decided that the workers in the teams would get $80\%$ of their base pay from the year before, but would get a bonus for every $1000$ toys they made beyond what they produced last year. By his calculations, if his division produces the same number of toys as last year, the bonuses will put the teams at $100\%$ of their pay. If they produce fewer toys, they will make less money$--$but if they produce more, they will make more. In order to keep teams from competing against each other, the bonuses will be paid out according to how well the entire division does, not on how each individual team does. James decided to do this on a Monday and had it implemented on that Tuesday, with a memo sent out explaining the change.

So far as the team leaders are concerned, James decided to give them $80\%$ of their pay but, instead of more money, the team leader bonuses would consist of company$-$paid trips to Europe. James thought that this was a great idea, as everyone likes to go on trips. Furthermore, the trips are actually worth more than the team leaders would be able to make if they were just being paid cash, even if the division suddenly became the top producer in the company. So they are worth more than the money they would get, but the system still saves the company money because the company owns a travel agency, meaning that they are able to get the trips at a huge discount. This new policy is the only change that James can think of that might have affected the teams in his division.

Write a memo about the situation, what to do about it$,$ and how and why to solve the issue.