Asked by Lexie Clontz on Sep 24, 2024
Verified
Which of the following is true?
A) Incentive compensation imposes no risks on the agents and thus should not affect their compensation
B) Incentive compensation imposes risk on the agent but need not be compensated for
C) Incentive compensation imposes risk on the agent for which they should be compensated
D) Incentive compensation is a bad idea
Incentive Compensation
A form of payment designed to motivate and reward employees for exceeding specific performance goals.
Compensation
Payment or benefits provided to employees in exchange for their labor or services, including salaries, wages, and benefits packages.
- Understand the role of incentive compensation in managing agent behavior.
Verified Answer
ML
Myrta Leconte4 days ago
Final Answer :
C
Explanation :
Incentive compensation often involves agents taking on additional risk in order to earn additional rewards. Therefore, they should be compensated for the potential risks they take on. Option A is incorrect because this assumes that there are no risks involved with incentive compensation, which is typically not the case. Option B is incorrect because it suggests that agents should not be compensated for the risks they take on, which is not typically considered fair compensation practice. Option D is incorrect because incentive compensation can be an effective tool for encouraging desired behaviors and outcomes.
Learning Objectives
- Understand the role of incentive compensation in managing agent behavior.