Why Is a Bottom-Up Approach for Compensation Budgeting Favoured by the Textbook

question 9

Multiple Choice

Why is a bottom-up approach for compensation budgeting favoured by the textbook author?

• A) For its simplicity.
• B) It supports the strategic pay notion.
• C) It ensures strategy fits with other strategic aspects of the organization.
• D) It is more compatible with new human resource information systems.

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Definitions:

Neoclassical Economic Model

An economic theory that focuses on how the equilibrium state of markets is reached through supply and demand forces, emphasizing utility maximization and profit maximization.

Behavioral Economics

A field of economics that studies the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions.

Overconfidence Effect

The bias where an individual's subjective confidence in their judgments is greater than their objective accuracy.

Cognitive Bias

A cognitive bias is a systematic pattern of deviation from norm or rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion.