Which of the Following Is Not a Sound Guideline for Designing

question 2

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) Ways must be found to reward deserving non-performers 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:

Compounded Quarterly

The calculation of interest where the interest is added to the principal every quarter, thus the total amount of interest earned increases each quarter.

Monthly Compounding

An interest calculation method where the accrued interest is added to the principal sum every month, leading to an increase in the amount of subsequent interest accruements.

Effective Rate

The actual interest rate earned or paid on an investment or loan, taking into account the compounding of interest.

Quarterly Compounding

Interest calculation that occurs four times a year, effectively increasing the amount of interest accrued over time.