Solution manual cost and managerial accounting 3rd by barfield introduction to cost management systems

Chapter 2
Introduction to Cost Management Systems
Questions
1.

The production of any service or product requires inputs. No
product or service is produced without incurrence of costs.
The objective in incurring costs is to reap a reasonable
return on those costs so that profits are generated.

2.

Cost accounting data are becoming increasingly important
because of the transference of power from producers to
consumers. With many equivalent, high-quality products and
services competing for consumer dollars, producers have lost
some ability to control their prices. Now, the producers must
concentrate on controlling costs to generate profits. A
secondary consideration in redesigning cost systems is the
influence of advancing information technology. With today’s
high tech information systems, firms can acquire and manage
more information at lower cost than ever before.

3.

The only realistic method of evaluating whether costs are
being effectively managed is to compare the benefits generated
with the costs incurred. This approach is equivalent to
evaluating the costs incurred relative to the objectives that
were to be accomplished from incurring the costs.

4.

All control systems rely on information. Information is
needed regarding expected performance and actual performance.
An effective management information system gathers and
disseminates both types of information.

5.

A control system is a tool to aid managers in steering an
organization to the achievement of its goals. A control
system has four components: a detector, an assessor, an
effector, and a communications network. A control system
exists to keep an organization’s actual operations in line
with its plans and strategies.

6.

Multiple control systems are necessary because no single
control system can be effective for all dimensions of
performance. For example, firms have activities related to
purchasing, selling, operating, hiring, and contracting. All
of these and other areas will require control systems.

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Introduction to Cost Management Systems

7.

Organizations typically have goals and objectives for both the
short and long terms. Consequently, organizations must have
control systems in place to ensure that both short- and longterm targets are achieved. For businesses, one important
short-term goal is to achieve profits, and a long-term-goal is
to remain solvent and viable.

8.

Managers might be willing to accept errors or miscalculations
in information if the cost of getting more accurate
information was too high or if the time spent obtaining more
accurate information was too long. Timeliness and cost are
two important factors that managers must consider in
determining when to acquire more accurate information.

9.

Research and development: GAAP-based rules require these
costs to be expensed as incurred. For internal purposes,
however, managers may want to match these costs with the
benefits they generate: new products and services.
Product costs: For internal purposes, activity-based cost
assignments may be used to better understand cost causality.
For external purposes, more traditional cost assignments may
be used for compliance with GAAP and IRS requirements.
Life cycle considerations: For internal reporting purposes,

costs may be maintained on a life-cycle basis to better
associate cause and effect; for external reporting, the firm
will likely use period-by-period reporting to be in compliance
with GAAP.

10.

An integrated cost management system should relate the costs
of business processes to the benefits they generate. This
information is useful in evaluating both the effectiveness and
efficiency of the processes. A CMS may generate other
information useful in evaluating the effectiveness of
processes such as their ability to improve product quality.

11.

No. The primary purpose of a cost management system is to
manage costs relative to strategies. Thus, the intent is to
control expenditures to maximize the achievement of goals that
have been specified by shareholders, managers, and other
organizational participants.

12.

Every organization is unique in its objectives, constraints,
culture, strategies, and structure. Because all of these
variables are important determinants of the configuration of a
cost management system, every organization requires a unique
cost management system.

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27

13.

Organizational form influences the cost management system
design in several ways. For example, organizational form
determines, in part, who in the organization is empowered to
make decisions. Also, the organizational form determines
whether certain costs will be incurred (e.g., federal income
taxes) and, whether those costs affect other costs such as the
cost of acquiring public or private capital.

14.

Core competencies are activities a firm must execute well to
survive. Information useful in assessing core competencies
would include benchmark data from competing firms or other
firms, historical performance data, intelligence regarding
actions likely to be taken by competitors, and measurement
systems to capture performance in areas of core competencies.

15.

Centralized control is more appropriate in environments that
are relatively static and in firms that have a shortage of
managerial talent and constrained resources for developing

effective control systems.
Decentralized control is more appropriate in
organizations that are very dynamic and involved in diverse
activities in which people closest to the action have the best
information for making decisions. Decentralization is also
warranted in geographically dispersed firms that have the
talent and resources to develop the necessary sophisticated
control systems to make decentralization work effectively.

16.

A person’s answer to this question will likely hinge on how
comfortable the person is with accepting authority and the
responsibility for using it. Working in a decentralized
environment gives an employee more autonomy but also more
responsibility for results. Certainly, some employees may be
willing to sacrifice some freedom of choice to avoid that
responsibility and, therefore, would prefer a more centralized
environment.

17.

a.

Build mission: market share data, growth in product
sales, data on geographic sales, cost of engineering
design changes, and product life cycle cost data.

b.

Harvest mission: profit measurements, market share,
cash flow, sales volume, and product line/geographic
information.

c.

Hold mission: cash flow, profit measurements, market
share, marketing and distribution costs, and market data
such as competitor pricing


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Introduction to Cost Management Systems

18.

Organizational culture can be an effective control device. A
culture is a reflection of the values and practices that are
acceptable or preferred by the company. The mere existence of
the culture deters certain undesirable practices and
encourages others. The culture can be perpetuated by hiring
people who have values that are consistent with the culture.
In this manner, the culture is perpetuated and the employees
have homogeneous beliefs regarding behaviors.

19.

AT&T operated in a regulated environment. In such an

environment, the company had no competitors and no incentive
to be cost efficient in its operations. Most decisions were
made at the top, and employees were socialized to be followers
rather than leaders. With deregulation came the need for AT&T
to be concerned about cost control. In the Soviet Union all
resource allocations were made by centralized managers
(government officials). Perestroika resulted in the
equivalent of decentralization. Resource allocation was
turned over to the private sector. Also, many former
government facilities were privatized and became private
firms. In both the AT&T case and the Soviet Union, the
isolation from competitive forces was removed. To survive,
AT&T and the many privatized operations in the Soviet Union
had to learn how to satisfy customers, or become marketfocused rather than internally focused.
With these changes, managers needed to acquire
information about their customers and competitors. In
addition to understanding their markets, the managers needed
to find ways to become more efficient. To become more
efficient, managers had to encourage employees to be costconscious and provide them with incentives to reduce costs.
Accordingly, information about employee performance was
needed, aw well as information regarding supplier pricing,
taxes, quality measurement, and customer-based performance.

20.

Confrontational competition involves a company seeking a
temporary market advantage over its rivals. To assess
relative standing in a competitive dimension, such as product
quality, a company necessarily must have information about its
competitors—in this example, information about quality.

21.

The life-cycle stage determines which costs are important and
which costs are controllable. For example, in the design
stage, no production costs are being incurred; so, a focus on
production costs would be ineffective and inappropriate.
Instead, the focus should be on research and development costs
and product design costs. Similarly, in later stages of the
product life cycle, no R&D expenses are being incurred,and
thus, no focus should be given to them; rather, production and
marketing costs should be the focus of attention.


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22.

Cost management has risen to the top of concerns because it
has become a primary determinant of profitability. Because
competition is increasingly a contest among equals, the
balance of power in the marketplace has been shifted to the
consumer, who now has many choices of competitive products and
services. With many equivalent products competing for
consumer dollars, the ability of any company to control price
is diminished. Companies must focus on reducing price to
maintain market share; to achieve price reductions, companies

must effectively manage costs.

23.

Core competencies for a typical college or university
would include the areas of: student retention, student
recruiting, student placement, faculty recruiting, cost
management, faculty/student ratios, research productivity,
generation of research grants, and fund raising. Student
answers will vary from those provided here.

24.

Productivity is the amount of output generated per
employee. Sales is the most likely measure of output. To
increase productivity, managers can increase the use of
technology. Technology allows more output to be produced with
fewer employees. Managers can also invest heavily in training
to improve the skills of workers. Higher-skilled workers are
more productive than lower-skilled workers. Managers can also
simplify product designs and production processes to improve
productivity and eliminate non-value-adding activities.

25.

Time-to-market is important in industries where economies of
scale can be captured by the firm first-to-market. Time-tomarket is important in automobile manufacturing (e.g.,
Chrysler and the minivan), electronics (e.g., Hewlett-Packard
and the inkjet printer, Apple and the personal computer), and
news reporting.

Industries in which time-to-market is less important
include commodity goods (e.g., agricultural products, mining),
very stable or mature industries (e.g., office furniture), and
industries in which there is little competition based on
product innovation (paper production).

26.

Supply chains, or value chains, are increasingly the focus of
cost management systems because managers are recognizing that
many costs must be managed between firms, not just within
firms. By sharing information and ideas with its suppliers
and customers, firms can develop effective cost management
strategies for virtually all costs—not simply those it
controls directly.


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27.

Feeder systems are the individual systems that provide the
information to the cost management system, e.g., payroll
system, accounts payable, accounts receivable. These systems
are very important to the design of a CMS because they
determine the type, format, and amount of information
gathered. One primary consideration is the compatibility

among the many feeder systems. Additionally, when gap
analysis is conducted, any additional information that is
needed may be acquired from an existing feeder system.

28.

They are equally important as they are all integral to the
design of an effective cost management system. Only when all
three elements are designed properly does the cost management
system serve to effectively and efficiently implement the
firm’s strategies.

29.

False. To be successful, a firm must be solvent in the short
run and profitable in the long run. As long as a firm has
enough cash to cover any negative cash flows, it can operate
at a loss in the short term. Often, short-term profits must
be sacrificed to obtain long-term profits. This is
particularly true in industries that require large upfront
investments in research and development to develop and
introduce new products.

30.

Students should have little difficulty thinking of incidents
where the relationship between behaviors and performance
evaluation is evident. Sometimes the behavior exhibited is
positive, and sometimes it is negative. For example, by
grading based on class participation, a professor may get

students to be more involved in class discussions. By giving
certain types of exams, a professor may encourage students to
memorize facts. By providing demerits for missing class, a
professor may encourage a high level of class attendance. By
rewarding only research productivity, a university may
encourage a professor to be uncaring about the quality of his
or her teaching.

31.

Managers use multiple perspectives to design performance
measures because they recognize there are different
stakeholders in their organizations. All of these
stakeholders must be satisfied with the performance of the
organization if the organization is to thrive.
For example, customers are interested in innovative,
high-quality products and services that are delivered at a
reasonable price. If customers are not satisfied, they can
take their dollars elsewhere and the company will fail.
Stockholders are interested in a satisfactory return on
their investments. Generation of profits, dividends, and
appreciation in stock prices attract stockholders. The
failure to achieve these outcomes will leave the firm unable
to attract the capital that is necessary to remain viable.


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31

32.

Gap analysis is a formal process in which the actual set of
control and information systems of an organization are
contrasted with the ideal set of such systems. Any
differences between the sets are labeled “gaps.” The purpose
of gap analysis is to develop a strategy to close the gaps so
that the actual systems in place come to resemble the ideal
systems.

33.

CAM-I was a consortium organized to develop a framework for
the design of cost management systems in advanced
manufacturing settings. One outcome of CAM-I was a set of
principles for designing cost management systems. Although
compatible with existing cost accounting systems, the set of
principles as a whole suggests a radical departure from
traditional practices. The practices focus management
attention on organizational activities, product life cycles,
integrating cost management and performance measurement, and
integrating investment management and strategic management.


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32
Exercises

34.

Two observations arise from an examination of the data.
First, Firm Z is generating more profit per dollar of sales
than is the average firm in the industry. Although the
average firm generates profit equal to 10 percent of sales
($0.096 ÷ $0.96), Firm Z’s profits are a whopping 26 percent
of sales ($1.04 ÷ $4). Second, relative to its sales, Firm Z
is spending much less on advertising, R&D, and investment in
new facilities as indicated in the following table.
Spending as a Percentage of Sales
Firm Z Industry Average
Advertising
2%
17%
R&D
8%
25%
Facilities investment
10%
25%
While one interpretation of the data is that Firm Z is
much more profitable than the average firm in the industry
because it is more effectively managing its costs, the
opposite is likely true. Firm Z is robbing from its future to
increase the current level of profits. Unless Firm Z starts
investing much more heavily in the three areas featured in the
problem, the firm will start to lose market share, sales will
drop, and profits will decline dramatically.

35.

The problems cited in the article are serious but can be
addressed with a comprehensive solution. Although solutions
can be devised for all firms, the solution crafted for any
particular firm in the advertising industry may differ from
the others. The starting point in designing a solution would
be to formally develop a company mission statement, determine
a competitive strategy, and describe the market to be served.
Next, the organizational structure would be reviewed to
ensure that it is appropriate for the strategy that is to be
implemented. Then, control systems can be designed that are
tailored to the strategy, structure, and culture of the
specific advertising firm.
As described in the article, most problems in the
advertising industry relate to poor customer service. This
dimension of performance deserves special consideration in
devising the cost management system. The cost management
system developed for any firm would need to include control
components from all three categories of system elements:
motivational, informational, and reporting. A key to making
the new systems effective would be to establish accountability
consistent with the organizational authority structure.


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33

To be accountable, each manager in the advertising agency
must be assigned certain responsibilities. Each manager’s
performance should be measured relative to benchmarks that are
specific for a given type of responsibility. Then, a reward
system must be established that provides monetary and other
benefits that are based on the comparison of actual and
benchmark performance. If designed appropriately, the
performance and reward systems will convince managers to be
much more attentive to the needs and demands of their
customers. Additionally, information systems would be
developed to ensure that each manager received the data
necessary to fulfill their responsibilities competently.
36.

The presentation should, at a minimum, discuss the following
points:
• the corporation is relatively more expensive to launch than
the other organizational forms.
• the general partnership is the least expensive to form.
• outside capital is easier to raise in the corporate form
because of the limited liability protection offered to
shareholders along with the well-developed secondary markets
for publicly-traded stocks.
• separation of ownership and management is most difficult in
the general partnership form. It is probably easiest to
achieve in the corporate form.
• only the corporation is subject to income taxes. The other
entity forms can be taxed as pass-through entities.
• only the general partnership exposes the investors to
unlimited liability. The other forms offer at least limited

liability to investors.

37.

No solution provided.

38.

No solution provided.


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39.

The old adage “you get what you measure” applies to the use
of accounting information. The major points that should be
raised in the discussion are:
• Accounting information will promote goal achievement only if
the measurements are highly correlated with the goals.
Alternatively, goal congruence problems will be created if
the accounting information captures performance dimensions
that are not highly correlated with goal achievement. The
use of nonfinancial performance measures may serve to
strengthen the tie between accounting information and goals.
• Only if the accounting information is accurate will it serve
to promote goal congruence and goal achievement.

• Only if the accounting information is used as a basis to
both measure performance and reward employees will it be
relevant. Even if accounting information is highly
correlated with organizational goals, managers and employees
will ignore the information unless it directly affects their
welfare. It will affect their welfare if their evaluation,
pay, and promotion are based on accounting measurements.

40.

No solution provided.

41.

If a firm fails to achieve its goals and objectives, there are
two possible causes related to topics in this chapter. First,
the strategy itself could have been flawed (because, for
example, the organization lacked the necessary resources to
execute the strategy). Second, the control systems may have
been inadequate to ensure that the strategy was successfully
implemented.
The fact that Corel demonstrated a distinct change in its
approach to management of its costs, in this case, indicates
the company changed its strategy. The original strategy was
to use a low-price approach to capture market share from
Microsoft. However, the company lacked the necessary
financial resources to maintain this strategy.
The company changed to a strategy of becoming a niche
player (formally, this strategy is sometimes called
compression of competitive scope) rather than the dominant

player in the industry. The main niche the company seeks to
serve is the current owners of Corel software—individuals and
firms who have previously indicated a preference for Corel
products. With the change in strategy, the company no longer
needed to spend massively on advertising and promotion to
attract a broader clientele. Consequently, the company
slashed these costs and that allowed profits to increase.

Students will have different answers.


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35

Cases
42.

Although the specific company selected will determine the
solution to this case, some generic actions can be taken by
most firms.
With regard to customers and suppliers, some typical
costs that could be reduced by having better sharing of
information include
1.
Costs related to producing products that have no current
buyers. These costs include obsolescence, spoilage,
theft, insurance, storage, and property taxes.
2.

Costs related to non-value-adding features. Customers
purchase products to satisfy specific needs. If a
product contains features for which no specific customer
need is satisfied, then costs are incurred without any
benefit being obtained.
3.
Coordination costs relating to order taking and order
filling as well as distribution. Through better
communication with customers and suppliers, costs related
to sales, billing, accounts collection, cash movement,
and freight can be reduced.
4.
Quality costs. By sharing information with suppliers
about the quality of the suppliers’ outputs, suppliers
can take actions to improve the quality of their
products.
5.
Product design and manufacturing costs. By sharing
preliminary product design data with customers and
suppliers, less expensive components may be identified
and more efficient production processes may be developed.
6.
Promotion costs. By better understanding how to reach
customers to give them information about new products,
costs of marketing and promotion can be reduced.

43.

a.

Procter & Gamble’s decision was based on the high cost of
distributing and redeeming coupons. These costs could be
avoided if the firm elected to discontinue use of coupons
as a promotion tool. The cost savings represent the
benefits to be realized. There are two major costs of
discontinuing the use of coupons. The first is the
potential loss of existing customers. The second is the
cost of alternative promotion mechanisms that would be
used to replace the coupons.

b.

The market strategy may be to compete more on the basis
of price and less on the basis of product
differentiation. By spending less on product promotion,
the company will have a lower breakeven point, and by
lowering the price, it may recoup some of the loss in
profits per unit through an increase in the volume of
sales.


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36
44.

a.

The implied mission is either hold or harvest. The

reduction in costs such as R&D suggests that the mission
has become survival.

b.

Across-the-board cuts would be a logical approach to cost
cutting only if all organizational units have the same
mission. Across-the-board cuts would likely have a much
more detrimental long-term effect on units with a build
mission than other units. By implementing major cuts to
units with a build mission, a company may be severely
harming its future.
Across-the-board cuts are typically imposed in lieu
of specifying specific costs to be cut. By imposing
across-the-board cuts, top managers are implying that no
activities are more crucial than any other activities to
the company’s profitability and survival. This is strong
evidence that the company is not managing its cost
relative to its strategy.

c.

A better system of cost management would relate all
activities to customer value. Those activities
generating high value relative to cost would not have
been cut. Additionally, the mission of each subunit
would have been considered in identifying which costs to
cut. Those subunits with a build mission would likely be
protected from cost-cutting to some extent. Also, the
company would consider which core competencies could be

damaged by cost cutting measures and would take steps to
make certain that those competencies are protected from
effects of severe cost cutting.


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Introduction to Cost Management Systems
45.

37

The following are the major problems in the Residential
Products Division:
• The mission of the division is not defined, nor is the
broader strategy of the firm.
• Green has no incentive to invest in assets that will foster
future growth. Her compensation is a fixed salary and a
bonus based on annual profit. The bonus scheme does not
encourage growth. This is aggravated by the fact that Green
is 53 years old and may be contemplating retirement in the
not-too-distant future.
• The division’s growth is stagnant, and market share is
slipping. Further, the division does not seem to have a
major presence in the growth sector of the market,
ornamental products.
• The division is not exploiting information technology.
Although it has some computerized systems, there is no
apparent integration of systems.
• The division is obviously not customer-focused. It has no
customer service department and apparently no out-of-office

sales staff to promote products.
• The annual operating budget is the only major control tool
used by upper management.
Some actions that could be taken to address the problems in
the Residential Products Division follow.
• Develop a mission statement for the division that is
consistent with the strategy of the firm. A strategic plan
should also be compiled.
• Develop an integrated cost management system for the firm.
The control systems need to be consistent with the strategy
of the firm and the mission of the division. From the
strong growth rate of the industry, some incentives need to
be developed to encourage growth in market share and sales.
Even if the mission is hold rather than grow, there is
opportunity for the division to regain lost market share.
• An integrated cost management system needs to be developed.
The system should include incentive elements, reporting
elements, and information elements. Informational elements
should allow Green and other managers to obtain the
information they need to make the division grow. For
example, the division needs to develop the capability to
determine what characteristics (quality, features, etc.)
customers desire in garage door hardware and other products,
the ability to monitor actions of competitors, and the
necessary information to evaluate cost control efforts.
• Culturally and structurally, the division needs to become
more customer-focused. Structurally, the division can
establish a customer service department and develop an
external sales force to gather information from customers.
Culturally, the division can become more customer focused by

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38

•

developing incentives for employees. Customer-related
incentives could be based on measures of quality, lead time,
product innovation, and customer service.
Structurally, at the corporate level, the company may need
to consider more decentralization of control. Using the
operating budget as the only major control tool may place
limits on actions that Green and her managers can take to
improve operations. With decentralization of control,
corporate management could develop new reporting elements
for the cost management system that would facilitate growth
in the Residential Products Division.


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46.

39

a.

The strategy implied in the news article is
differentiation through higher levels of quality customer
service than those offered by competitors. The quote “it
can cut a lot of costs without gutting the sales staff”
implies that the sales function is staffed at a high
level relative to the industry.

b.

The challenge at Nordstrom’s is to make the organization
more efficient without destroying either the company
culture, which is customer-oriented, or the high level of
customer service.
Assuming the corporate strategy of competing through
differentiation based on higher-quality service is
maintained, the following approach might be utilized.
This approach assumes that control systems at Nordstrom’s
will not be rebuilt from scratch but will merely be “fine
tuned” to achieve higher profitability.
1.
Develop a target for the amount by which costs are
to be cut.
2.
Compare the costs of Nordstrom’s to those of its
closest competitors in as many categories as
possible. The objective of this step is to
understand which costs should be targeted for
reduction.
3.
After identifying which categories of costs are

significantly higher at Nordstrom’s relative to
competitors, determine which costs could be reduced
while impacting customer service the least. In this
step, it is important to understand how each cost
category relates to customer service. Obtaining
direct input from consumers could be helpful in more
specifically defining the dimensions of customer
service that separate Nordstrom’s from its
competitors. The deepest cuts in costs should be in
the categories that have the least impact on
customer service and the value derived by customers
from shopping at Nordstrom’s.
4.
Develop target amounts by which each cost category
is to be cut. The sum of all targeted amounts
should match the amount stated in step 1.


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40

5.
6.
7.

47.

Determine who has responsibility for the costs

identified in steps 3 and 4.
Develop the necessary motivational elements to
create an incentive for cost reduction for the
individuals identified in step 5.
Evaluate the informational and reporting elements to
be certain the information and feedback systems will
support the cost reduction activities.

a.

GAAP-based rules for reporting earnings require most
costs related to developing and promoting new products to
be expensed as incurred. However, the products being
introduced may have a life cycle of five years or so.
Accordingly, it would be appropriate to capitalize the
research and development costs and amortize them over the
life cycle of the products. Since GAAP rules don’t allow
capitalization, the research and development and
promotion costs get expensed before the revenues from the
new vehicles are realized. This has the effect of
depressing current profits but also, perhaps, overstating
future profits.

b.

It would appear that there are motivational elements in
Kellogg’s cost management system that encourage growth.
Managers are demonstrating a willingness to invest in
future products even though doing so has the effect of
moderately depressing current reported profits. Managers

would be very reluctant to act in this manner if their
incentives were tied solely to current profitability.

Reality Check
48.

a.

Ordinarily, the cost management system [CMS] design team
creates its design within the context of decisions made
by a strategic planning team. Usually, the strategic
planning team recommends and management gains company
consensus regarding vision, mission, and major company
goals and objectives. However, in small companies, teams
are sometimes charged with a broader responsibility than
for one particular issue.

b.

Students will often suggest maximizing profits,
maximizing stockholder wealth, or maximizing customer
satisfaction. The truth is that these goals are mutually
supportive.

c.

Ignoring the satisfaction of any particular stakeholder
such as stockholders, managers or customers can have a
disastrous effect on the remaining stakeholders.
Therefore, a balance must be achieved in a manner that

considers the well being of all of these stakeholders
simultaneously.


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49.

50.

41

a.

The sharing of information allows employees to better
understand how they are expected to contribute to the
organization. In short, they see how their roles relate
to the roles of others. By better understanding their
roles, employees can identify ways to improve their job
tasks in ways that will increase the output volume or
quality of others as well as improving their own output
volume and quality.

b.

Sharing information removes the threat from both managers
and employees that one individual can use private
information to exploit another individual. Further, the
sharing of information allows employees to view issues

from the perspective of managers, and vice versa. The
result is that all individuals are likely to develop a
similar perspective of the business. Rather than
employees and managers having polarized views of issues,
each group will have an appreciation of the concerns of
the other. The result should be an increase in
cooperation.

Employer-provided health-care plans are common in the United
States and other industrialized countries. However, it is
difficult to develop an ethics-based rationale for this common
arrangement. It can easily be argued that because the amount
of healthcare coverage provided tends to be the same for all
employees of a particular class, health-care provision is less
motivational than other forms of compensation. It is, at
best, loosely tied to performance. Instead of providing
health-care coverage, employers could simply reallocate the
funds expended for health-care to its employees in a manner
that provides a tighter linkage between pay and performance.
Many would argue that this would result in a fairer allocation
of resources, which would benefit employees and other
stakeholders.


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