A bonus plan is superior to a merit-based pay plan because bonuses reward employees for current versus past performance.

Question

Quizplus · Accepted Answer

A bonus plan typically rewards employees for achieving specific goals or targets in the current year or period, providing an incentive to focus on current performance. In contrast, merit-based pay plans may be based on past performance evaluations and may not have as strong of an incentive effect on current performance.

A Bonus Plan Is Superior to a Merit-Based Pay Plan