Question

When an organization achieves quality and productivity improvements and rewards are linked to the cost savings achieved from such​ improvements, it is called​ ______.

A.pay for performance
B.a bonus
C.​competency-based pay
D.commission
E.gain sharing

Answer 1

The term is called gain sharing, a system where employees share in the financial rewards from productivity and quality improvements.

Step-by-step explanation:

When an organization achieves quality and productivity improvements, and rewards are linked to the cost savings achieved from such improvements, it is called gain sharing. This performance-based compensation system is designed to encourage effective teamwork and improved productivity by sharing the financial benefits of the work improvements with the employees. This is popular with both economists and the general public because it aligns the interests of the workers with those of the company, providing a motivation to increase productivity and reduce costs. Gain sharing serves as an excellent incentive, as profits and earnings are distributed among employees, resulting in direct benefits to the employees from the success of the business.