If a Firm Frequently Changes the Basis of Its Pay-For-Performance

question 89

Multiple Choice

If a firm frequently changes the basis of its pay-for-performance system,it will most likely:

• A) diminish its credibility gap.
• B) violate its psychological contract with employees.
• C) generate fear among employees due to a lack of control.
• D) increase employees' intrinsic drive to perform beyond expectations.

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Definitions:

Preferred Share

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, often receiving dividends before common shareholders.

Discount Rate

The interest rate that the Federal Reserve charges commercial banks for loans, or a rate used in discounted cash flow analysis to determine the present value of future cash flows.

Compounded Semi-annually

Interest calculation method where the interest is added to the principal twice a year, leading to a growth in the amount at a faster rate than simple interest.

Compounded Quarterly

This term refers to the calculation and addition of interest to the principal sum of a deposit or loan on a quarterly basis.