Asked by Brianna Umble on Sep 23, 2024
Which of the following statements about incentive pay plans is true?
A) Unlike merit pay plans, base pay is set at the market rate for incentive plans.
B) With incentive pay, high performers earn more but no permanent adjustment is made to an employee's base pay.
C) Once earned, the incentive pay becomes a part of the employee's base pay.
D) Caps are used to keep incentive pay levels even with the industry pay level.
E) There is no difference between how merit pay plans and how incentive pay plans are used to reward employee performance
Incentive Pay Plans
Compensation strategies designed to motivate employees through financial rewards based on performance, productivity, or achievement.
Base Pay
The initial salary given to an employee, not including benefits, bonuses, or any other potential compensation.
Merit Pay Plans
Compensation strategies that provide pay increases based on an employee's performance, as opposed to seniority or hours worked.
- Identify the types of performance-based pay plans and their suitability for different organizational contexts.
Learning Objectives
- Identify the types of performance-based pay plans and their suitability for different organizational contexts.
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