A good compensation scheme:
A) ties rewards to actions that an agent does not control.
B) ties rewards to actions that an agent controls.
C) will not increase performance in a poor economy.
D) is based on luck.

Question

Quizplus · Accepted Answer

A good compensation scheme should tie rewards to actions that an agent controls, as this provides an incentive for the agent to work hard and perform well. Tying rewards to actions that an agent does not control is unfair and demotivating. A compensation scheme is not expected to increase performance in a poor economy, but it should still provide fair rewards for good performance. A compensation scheme should not be based on luck as this could create inconsistency and confusion in the reward system.

A Good Compensation Scheme