Merit pay systems often fail for all but which of the following reasons?
A) Interference from union contracts.
B) The annuity problem.
C) Link between performance and rewards is too strong.
D) Incentive value of the reward offered is too low.

Question

Quizplus · Accepted Answer

Merit pay systems often fail because the link between performance and rewards is too strong, which means employees may focus solely on meeting the requirements to receive the reward instead of pursuing more meaningful work outcomes. Interference from union contracts and the annuity problem can also be factors, but they are not as common as the issue of overly strong incentive links. The incentive value of the reward offered being too low can also undermine the effectiveness of a merit pay system.

Merit Pay Systems Often Fail for All but Which of the Following