In 2018, Frito-Lay changed the compensation of drivers of trucks delivering Doritos, Cheetos, and other snacks to convenience stores and supermarkets. Previously, drivers’ compensation depended primarily on commissions tied to the revenue from the snacks they delivered. Frito- Lay shifted to drivers receiving a straight salary with few opportunities to earn commissions. Some drivers in New York and other cities had their compensation cut by as much as 30 percent. A significant number of drivers quit, leading to temporary shortages of Doritos in some stores. A Frito-Lay spokesman was quoted as saying, “This is a national initiative with the aim of aligning all sales associates. Participating sales representatives have on average seen an increase in overall compensation.”
a. What are the advantages and disadvantages to drivers from the change in Frito-Lay’s compensation scheme?
b. What are the advantages and disadvantages to Frito-Lay from the change in its compensation scheme?