Question

Which of the following is not characteristic of a compensation and reward system designed to help drive successful strategy execution?

A) Making the performance payoff a major, not minor, piece of the total compensation package
B) Keeping performance incentives and bonuses to less than 15% of total compensation
C) Not skirting the system to find ways to reward effort rather than results and making sure that the performance targets that each individual or team is expected to achieve involve outcomes that the individual or team can affect
D) Having incentives that extend to all managers and all workers and generously rewarding people who turn in outstanding performances
E) Tying incentives to performance outcomes directly linked to good strategy execution and financial performance and keeping the time between achieving the target performance outcome and the payment of the reward as short as possible

Answer 1

The characteristic that does not support successful strategy execution in a compensation and reward system is keeping performance incentives and bonuses to less than 15% of total compensation. Successful systems offer significant performance-based pay related to strategy execution and deliver rewards promptly after targets are met.

Step-by-step explanation:

The characteristic of a compensation and reward system that is not designed to help drive successful strategy execution is B) Keeping performance incentives and bonuses to less than 15% of total compensation. A system focused on strategy execution should make the performance payoff a significant component of the compensation package to motivate and reward employees for achieving strategic goals effectively.

Systems that reward effort rather than results or have minimal performance incentives may not align employee actions with the company's strategic objectives. Furthermore, incentives should be tied to performance outcomes that are directly linked to good strategy execution and financial performance. Additionally, employees are typically more motivated when the reward follows closely after the achievement.