Which of the following guidelines for designing compensation systems is least li
ID: 468825 • Letter: W
Question
Which of the following guidelines for designing compensation systems is least likely to align the well-being of personnel with executing the company’s strategy?
Providing a portion of compensation in the form of stock options as a means to reward managerial effort
Making liberal use of nonmonetary rewards, in addition to monetary rewards
Linking the reward system to strategically-relevant performance outcomes
Balancing rewards with the risk of punishment, while ensuring the use of more positive than negative motivational elements
Extending the reward system to all managers and workers, while administering with objectivity and fairness
a.Providing a portion of compensation in the form of stock options as a means to reward managerial effort
b.Making liberal use of nonmonetary rewards, in addition to monetary rewards
c.Linking the reward system to strategically-relevant performance outcomes
d.Balancing rewards with the risk of punishment, while ensuring the use of more positive than negative motivational elements
e.Extending the reward system to all managers and workers, while administering with objectivity and fairness
Explanation / Answer
The correct answer is option a.
Stock option helps the employees to buy company's share at set price for specified time frame and this can be exercised any time within the term. Stock options are often part of management’s executive compensation and it can be offered to key employees instead of a higher salary—especially where the business is not yet profitable and/or cash flow is constrained. However this approach is best used for retaining the employees long with the company.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.