Problem:
Review Figure 1 portrayed below: Crowding Out Effect.jpg Answer all three questions below. Use the figure to explain the implications of crowding out effects for work effort in organizations. In Figure 1 what would a crowding in effect look like? What is the implication for work effort in the organization? Modify Figure 1 to graphically illustrate your answer. Imagine the following the scenario: A social security administration rewards all teams (4-5 persons) with a bonus of $3000 biannually if they manage to process 95 % or more of the applications the team receives within the advised processing time (target set by management). What do you expect will happen to employees' motivation and performance? How will crowding in, crowding out and/or a price-/disciplining effect affect the behavior of the employees? Consider how this case and your reflections apply to the organization you've chosen for your management analysis.