When a Pay System Links the Attainment of Certain Goals

question 26

Multiple Choice

When a pay system links the attainment of certain goals or achievements directly to the employee's pay, a _____ is being used.

• A) going rate model
• B) competency-based system
• C) management fit model
• D) skill-based pay system
• E) variable pay system

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Definitions:

Sustainable Operating Profits

Profits from core business operations that are expected to continue or be maintained without significant new investment or changes in the business environment.

Nonrecurring Items

Financial events that are not expected to happen regularly in a company's business cycle, affecting the company's usual revenue or expenses.

Reported Income

The income that a company officially reports, usually on its income statement, reflecting the financial performance over a specific period.

Return on Assets (ROA)

A financial ratio that indicates how profitable a company is relative to its total assets, calculated as net income divided by total assets.