Asked by Lichien Angela on Sep 24, 2024
Verified
A solution to the budget-gaming problem is
A) Introduce milestones or kinks in the compensation scheme
B) Use a target based pay function with each target scoring greater return
C) Do not base compensation on meeting a particular budget goal
D) All of the above
Budget-gaming Problem
A situation in which managers manipulate financial allocations for personal advantage or to meet shortsighted objectives.
Compensation Scheme
a structured plan designed by organizations to determine and provide salaries, bonuses, benefits, and incentives to employees.
Target Based Pay
Target based pay is a compensation strategy that ties an employee's earnings directly to the achievement of specific performance targets.
- Recognize methods to minimize manipulative practices in budgeting for performance-based pay.
Verified Answer
AH
Aaron Hemmans2 days ago
Final Answer :
C
Explanation :
Basing compensation solely on meeting a specific budget goal can create unnecessary pressure and disincentivize long-term thinking or experimentation. Instead, it may be better to consider other factors such as milestones or targets, but ultimately not tying everything to a specific budget number.
Learning Objectives
- Recognize methods to minimize manipulative practices in budgeting for performance-based pay.