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Case of Big Mac's Pay Plans
A case study examines the history of McDonald's compensation schemes for managers. The initial plans, managers complained, based compensation on sales volume, were too complicated, and used bonus payments based on supervisors' subjective evaluations which inaccurately recognized performance. McDonald's then developed four alternative plans. Four experts comment on the plans and outline various objectives: to be result-oriented, to produce extra effort, direct effort, provide compensation, encourage risk, place an emphasis on higher sales, avoid rapid upward mobility, and provide a comprehensible system which the managers find fair.