Goodwin,Inc.has recently proposed a plan to base 15% of employees' salaries upon their accomplishment of specific performance goals.Goodwin,Inc.is most likely proposing what type of pay policy?
A) Profit sharing
B) Variable pay
C) Pay freezing
D) Bumping

Question

Quizplus · Accepted Answer

Variable pay is a pay policy that ties a portion of an employee's compensation to some measure of the employee's performance. Goodwin, Inc.'s proposal to base 15% of employees' salaries on their accomplishment of specific performance goals fits within the definition of variable pay. Profit sharing, choice A, is a pay policy that distributes a portion of profits to employees as a form of incentive pay. Choice C, pay freezing, is not a pay policy but a cost-cutting measure in which employees' pay is not increased during a certain period. Choice D, bumping, is a union negotiation technique in which a senior employee takes the job of a less senior employee, who in turn takes the job of another less senior employee, and so on.