Employee Performance Measures and Compensation Plans

What is the most effective type of compensation when employee performance measures are ambiguous and vary from time to time, but the organization's performance is fairly stable over time?

A. large base and low-incentive pay
B. variety of rewards and base pay
C. a variety of rewards with significant incentive pay
D. monetary rewards with large incentives

Answer:

The correct answer is C. a variety of rewards with significant incentive pay.

Explanation:

If employee performance measures are ambiguous and vary over time while the organization's performance remains stable, it is crucial to implement a compensation plan that includes a variety of rewards with significant incentive pay. In this scenario, a fixed base pay may not adequately motivate employees due to the uncertainty of their performance measures. By offering a variety of rewards along with significant incentives, employees are encouraged to consistently perform at their best, leading to improved productivity and results. This approach ensures that employees are rewarded based on their actual contributions and motivates them to strive for excellence.