A particular organization wants to include in their compensation system some element of organizational performance linkage, while at the same time it wants to encourage employee commitment. In addition to base pay, which of the following would most likely be included in this compensation mix?
A) merit pay
B) piece rates
C) profit sharing
D) targeted incentives

Question

Quizplus · Accepted Answer

Profit sharing would be the most appropriate choice as it links compensation to organizational performance and also encourages employee commitment towards achieving the organization's goals. Merit pay may focus more on individual performance rather than the overall performance of the organization. Piece rates are typically used for jobs that have a direct output measure and may not be suitable for all types of jobs. Targeted incentives may be useful for specific performance goals, but may not provide a long-term organizational performance linkage.

A Particular Organization Wants to Include in Their Compensation System