Senior Management in Your Organization Wants You to Explain to the Board

question 26

Multiple Choice

Senior management in your organization wants you to explain to the board of directors the key concept that makes compensation systems work.It would be correct to tell them that the ideal compensation system must

• A) keep labor costs as low as possible.
• B) provide for employees needs while keeping labor costs within reasonable limits.
• C) pay the highest wages in the industry.
• D) encourage employees to work for as little as possible to keep company profits as high as possible.
• E) focus attention on benefits rather than on salaries,which are kept low on purpose.

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Definitions:

Total Costs

The aggregate amount of all costs associated with the production or offering of goods and services, including fixed and variable costs.

Output

The quantity of goods or services produced in a given time period.

Total Fixed Costs

The sum of all costs required to produce any level of output that do not change with the quantity produced, such as rent or salaries.

Workers

Individuals engaged in physical or mental activities aimed at producing goods or providing services in exchange for wages.