Macmoo’s compensation structure is based on which of the following pri

QUESTION

Macmoo’s compensation structure is based on which of the following principles?

A) People will act to accomplish a goal when they have a stake in the accomplishment of that goal.
B) An incentive structure should be as simple as possible.
C) An incentive structure is more effective when it encourages people to act in ways that benefit society in general as well as themselves.
D) Compensation policies should always follow the specific requirements of all applicable laws.
E) People will be more likely to follow a policy when they have had some input into the creation of that policy.

ANSWER

Answer: A
Explanation: A) The incentive policy rewards people when a goal (overall success) is met. This potential reward gives people a stake in accomplishing that goal and encourages them to act in order to make it happen. So the designers of the compensation structure are following the principle in Choice A. They think that people will act to accomplish a goal (overall success) because they will be rewarded if it happens. Choice B: The structure is more complicated than it could be, so Choice B doesn’t fit. Choice C: There’s no provision for the benefit of society in general here. Choice D is good advice, but legal requirements have no role here. Choice E doesn’t fit because as far as we know no salespeople were consulted.