alleryStart learning →Which incentive plan pays employees a share of the financial gains from the productivity of their own group?
AA profit-sharing plan
BA gain-sharing plan
CA piece-rate pay plan
DA stock option grant
Answer & Solution
Correct answer: B. A gain-sharing plan
1. Variable pay ties part of an employee's pay to an individual or organizational performance measure.
2. Gain-sharing plans are incentive programs based on group productivity.
3. Employees share in the financial gains attributed to the increased productivity of their own group, whatever the overall profit picture.
4. Profit-sharing plans are based on overall company profitability instead, which makes them the closest trap.
5. Piece-rate plans pay a given amount for each unit an individual produces, so the unit of measurement is the person rather than the group.
6. Stock options give the right to buy shares at below-market prices and are not tied to group output.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 9 "Motivating Employees", section 9.7 From Motivation Theory to Application_
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