Pay-for-performance or incentive compensation systems are built on the assumption that individual employees and work teams differ in how much they contribute to the firm.

Question

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Pay-for-performance and incentive compensation systems are designed to reward employees based on their individual and team contributions to the company. This assumes that some employees may be more productive or effective than others and should therefore receive greater compensation for their efforts.

Pay-For-Performance or Incentive Compensation Systems Are Built on the Assumption