Asked by Zheng Shouyi on Jul 15, 2024

verifed

Verified

Linking incentives to the organization's profits or stock price exposes employees to a high degree of risk.

Organizations' Profits

The financial gain that an organization achieves after deducting the expenses, costs, and taxes necessary to sustain its operations.

Stock Price

The cost of purchasing a share of a company, which fluctuates based on market conditions, company performance, and investor perceptions.

  • Acknowledge the potential ethical issues and risks associated with incentive pay, especially for executives.
verifed

Verified Answer

EO
Ester OrasmaJul 16, 2024
Final Answer :
True
Explanation :
Linking incentives to the organization's profits or stock price exposes employees to the volatility of the market which can result in high risk. Changes in market conditions, economic events, or internal factors can result in a decrease in profits and a decrease in the value of the company's stock, leading to lower incentives or even none at all. This is a common concern among employees, as their financial stability is tied to the organization's financial performance.