What financial benefit does an employer gain in choosing to provide incentive pay to its employees rather than an increase in base pay?

What financial benefit does an employer gain in choosing to provide incentive pay to its employees rather than an increase in base pay?
A . It reduces the possibility of perceived pay inequities based on distributive justice
B . It increases organizational engagement levels
C . It is less burdensome to a company’s bottom-line
D . It improves employee morale

View Answer

Answer: C

Explanation:

Incentive pay/variable pay/pay-for-performance refers to pay earned beyond an employee’s normal base pay i.e. wages or salary. It is pay awarded for results/performance rather than for time worked; it is not guaranteed (unlike base pay); and is paid out only if an individual/team achieves a productivity goal. Incentive pay does not add to the salary burden of an employer because staff base pay is not increased, and other forms of pay linked to base pay (overtime, shift premium, sick pay) are not impacted.