Understanding Incentive system According to Exhibit 9: Why is the incentive-compensation system so critical in a company where labor represents only 2%of the manufacturing cost? Why is a managerial improvement in a labor productivity so important for a commodity product?Understanding Incentive system According to Exhibit 9: Why is the incenti v e-compensation sy s tem so critical in a company w here labor represents only 2% of the manufacturi ng cost? Why is a managerial i mprovement in a labor productiv ity so important for a commodity product?