A problem with using a \"revenue sharing\" plan to compensate employees is that

Question

A problem with using a "revenue sharing" plan to compensate employees is that the plan

Does not provide incentives for employees to work hard

Will be costly if revenues are low

Does not provide incentives for workers to minimize costs

Will have high administrative costs

PLEASE GIVE A SHORT EXPLANATION TO YOUR ANSWER

Does not provide incentives for employees to work hard

Will be costly if revenues are low

Does not provide incentives for workers to minimize costs

Will have high administrative costs

Explanation / Answer

It gives no incentive for workers to minimize costs. Revenue sharing plan induces the workers to maximize revenues for the firm whatever way. Usually the workers while focussing on to maximize revenues do not consider the cost or do not even try to minimize the costs as their sole aim and focus is to maximize revenues.

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