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Economists have for a long time argued that performance-based bonuses raise performance. Indeed, many firms use bonuses tied to individual performance to motivate their employees. However, there has been heated debate among human resources professionals recently, and some firms have moved away...
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: employees that create lower expected profits as managers have yet better promotion prospects. That finding still holds when the … firm owner optimally chooses the promotion rule, the degree of delegation, and wage payments to both employees and managers …
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