Decisions About How to Design Pay Systems Should Follow a Careful

question 72

Multiple Choice

Decisions about how to design pay systems should follow a careful consideration of all of the possible consequences associated with alternative forms of pay. Which of the following is the most important reason for organizations to adopt the performance-based pay approach to compensating its employees?

• A) to reward top management
• B) to keep up with competitors
• C) to motivate employees
• D) to help achieve their strategic objectives
• E) to integrate the pay system with the organizational mission

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Definitions:

Required Reserve Ratio

The percentage of deposits that banks are mandated to keep on hand and not lend out, as regulated by central banking authorities.

Money Supply

The total amount of monetary assets available in an economy at any given time, including cash, coins, and balances held in checking and savings accounts.

Credit Cards

Financial instruments that allow holders to borrow funds to pay for goods and services with the expectation of repaying the loan with interest.

Debit Cards

Plastic payment cards that allow users to make transactions by deducting money directly from their checking account, rather than incurring debt like a credit card.