How does merit pay differ from incentive pay?
A) Merit pay is awarded to salaried employees while incentive pay is a reward for those who are wage-employees.
B) Merit pay typically relies on subjective performance appraisal ratings, and incentive pay is often based on the achievement of performance that can be quantified.
C) Incentive pay is a permanent increase, and merit pay is a one-time increase in pay.
D) Merit pay plans give managers more latitude in determining large distributions of rewards
E) Merit pay is more closely tied to the organizational vision, strategy, and culture than incentive pay.

Question

Quizplus · Accepted Answer

Merit pay is based on the overall performance and contribution of the employee, while incentive pay is awarded for achieving specific goals or targets. Incentive pay is often based on objective and quantifiable performance metrics such as sales targets, productivity targets, or cost savings targets. Merit pay relies more on subjective appraisals and evaluations by managers.

How Does Merit Pay Differ from Incentive Pay