The top management at a new social media technology company would like to revamp its incentive compensation system to attract ambitious employees. What would be their best approach?
A)Make the performance bonus at least 3 to 4 percent of base salary to have some impact.
B)Make the performance bonus at least 10 to 12 percent of base salary to have some impact.
C)Make the performance payoff equal for average and below-average performers.
D)Set unrealistic performance standards, but with an equally high compensation.
E)Reward people who work very hard, even if they fall short of achieving performance targets.

Question

Quizplus · Accepted Answer

A performance bonus that is at least 10 to 12 percent of base salary is likely to have a significant impact in attracting ambitious employees. This is because a higher bonus percentage signals that the company values and rewards high performance. Additionally, offering a higher bonus percentage could help differentiate the company from other competitors in the market who offer lower bonuses. However, it is important to ensure that the performance metrics and targets tied to the bonus are fair, achievable, and aligned with the company's goals. Setting unrealistic standards or rewarding people who fall short of targets could create a demotivating environment, leading to decreased performance and employee engagement.

The Top Management at a New Social Media Technology Company