Some compensation schemes include a signing bonus while others include the potential to receive annual year-end bonuses.
(a) From the firm's perspective, what are the benefits of offering a signing bonus? What are the benefits of offering a year-end bonus?
(b) If a firm pays its sales staff a piece rate and a year-end bonus, why will it be the case that the rate of pay per piece is less than the market value? Why will the sales staff willingly accept such an arrangement?
(c) How does the existence of year-end bonuses support the bonding critique?