Kevin Chang believes that the nature of his business operations makes measurement of performance almost impossible. Therefore, he wants to pay employees on the basis of hours worked. The compensation system he should use is a
A) profit-sharing plan.
B) time-based compensation system.
C) commission system.
D) differential piece rate system.

Question

Quizplus · Accepted Answer

A time-based compensation system would be the most suitable option in this scenario since it is difficult to measure employee performance due to the nature of the business operations. By paying employees based on the hours worked, it ensures that they are fairly compensated for their time and avoids the subjective measurement of performance. Profit-sharing plans often incentivize employees based on the company's financial success, which may not be applicable in this case. Commission systems are typically reserved for sales positions, and a differential piece rate system, which pays different amounts based on the number or quality of units produced, may not be applicable depending on the nature of the business.

Kevin Chang Believes That the Nature of His Business Operations