A firm might prefer to choose a salary system rather than a commission or piece-rate system of compensation when there are concerns about output quality.

Question

Quizplus · Accepted Answer

With a salary system, the employee is paid a fixed amount regardless of the quantity or quality of output, which may be preferred by a firm that places greater emphasis on ensuring quality work rather than just focusing on output quantity. In a commission or piece-rate system, the employee is paid based on the amount of output produced, which may incentivize quantity over quality.

A Firm Might Prefer to Choose a Salary System Rather