Which of the Following Is NOT a Sound Guideline for Designing

question 30

Multiple Choice

Which of the following is NOT a sound guideline for designing a reward and incentive system that helps promote good strategy execution?

• A) The reward system must be administered with scrupulous objectivity and fairness.
• B) The payoff for meeting or beating performance targets must be a major, not minor, piece of the total compensation package.
• C) The incentive plan should extend to all managers and all employees, not just top management.
• D) The reward system must reward nonperformers who, despite expending tremendous effort, have not fared well in achieving the benchmarks under the incentive system.
• E) Make sure that the performance targets each individual or team is expected to achieve involve outcomes that the individual or team can personally affect.

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Definitions:

Public Good

A product or service that is non-excludable and non-rivalrous, meaning it can be used by many people without depleting the resource or preventing others from using it.

Demand-Side Market Failure

A situation where the demand curve does not reflect consumers' full willingness to pay for a good or service, often due to externalities or public goods.

Paradox Of Voting

A situation where the rational choice for an individual is not to vote because their single vote rarely affects the outcome, yet if everyone follows this logic, it undermines the democratic process.

Marginal Benefits

The additional satisfaction or utility gained from consuming or producing one more unit of a good or service.