Which of the Following Is NOT a Sound Guideline for Designing

question 69

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) Any incentive plan should extend to all managers and all employees, not just top management.
• D) Ways must be found to reward deserving nonperformers who, for some reason, do not fare well 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:

Net Sales

The amount of sales generated by a company after deducting returns, allowances for damaged or missing goods, and discounts.

Gross Profit

The financial metric representing the difference between revenue and the cost of goods sold before deducting overhead, payroll, taxation, and interest payments.

Inventory Value

The total cost or market value of all the goods and products held by a company intended for sale.

Replacement Cost

The current cost of replacing an asset with another of similar kind and same utility without considering depreciation.