Final answer:
Competency-based pay is the incentive program tied to an employee's knowledge and abilities, rewarding mastery of specific skills rather than performance tied to a specific job.
Step-by-step explanation:
The incentive program that is tied to an employee's knowledge and abilities rather than to a job is Competency-based pay. This program rewards employees based on their ability to demonstrate competency or mastery of specific skills or knowledge, and is distinct from other incentive systems that may be tied directly to job performance, outcomes, or profits of the company. In a competitive market, employers can leverage competency-based pay as an incentive to attract and retain talented employees by offering them wages that reflect their productivity and abilities. By focusing on skills and knowledge, businesses can ensure they are rewarding employees in a manner that encourages professional development and aligns with economic objectives.