A payment plan that induces better worker effort by linking compensation to revenues of the firm is known as:
A) revenue sharing.
B) profit sharing.
C) piece rate sharing.
D) spot checking.

Question

Quizplus · Accepted Answer

Revenue sharing is a payment plan in which an employee's compensation is tied to the revenues of the firm. This incentivizes employees to work harder and increase the firm's revenue, as their compensation will increase accordingly. Profit sharing (B) is similar, but ties compensation to the firm's profits instead of revenue. Piece rate sharing (C) is a payment plan in which an employee is paid a specific amount for each unit of production they produce. Spot checking (D) is a quality control technique in which a small sample of products or services is examined to ensure they meet certain standards.

A Payment Plan That Induces Better Worker Effort by Linking