A good compensation system can stimulate high performance at a cost reasonable for one's industry.

Question

Quizplus · Accepted Answer

A well-designed compensation system can motivate employees to perform at a high level and achieve organizational goals, without incurring excessive costs. By linking rewards to specific performance outcomes, companies can encourage employees to work harder and smarter, while also aligning their efforts with the company's strategic objectives. However, a poorly designed or administered compensation system may fail to incentivize high performance, or may result in excessive costs that erode profitability. Ultimately, the effectiveness of a compensation system depends on a range of factors, including the nature of the work being performed, the competitive dynamics of the industry, and the organization's overall business strategy.

A Good Compensation System Can Stimulate High Performance at a Cost