Mansoor Ali is in charge of maintenance. He is evaluated based on a flexible budget based on the number of machine hours operated. Mansoor gets a sizable bonus if his actual costs come in below budget. In recent months, complaints against the slow pace of maintenance work reached an all-time high. The sales manager complains that she lost a major sale because of production delays, caused by slow turnaround on machine repairs. The production manager says that he does his best to squeeze the most out of every machine because any time a machine requires maintenance it seems to take forever to get it back up into production. Mansoor’s response is that it takes time to do a good job. He says that if he fixed the machine in two days rather then three, the machine would be back in the shop in two instead of six months. “If I do something, I do it right,” says Mansoor.

Required:
a. Discuss how, if at all, Mansoor’s performance evaluation and compensation plans bear on the current situation.
b. How could you modify the systems to induce a higher level of cooperation among the managers of the various functional units?