What type of compensation plan ties employee pay to the number of job relevant skills or academic degrees they earn?

CFA charterholders can be found in a variety of roles across the investment industry. Therefore, compensation can vary based on job function and region. Moreover, a significant amount of compensation in the investment industry takes the form of bonuses, so total compensation includes base salary, any bonuses, and long-term incentives.

stock optionsgainsharingbonusesWhich statement about incentive compensation plans is true?

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Cash awards given to employees who achieve specific performance objectives arecalled ______.

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What type of compensation plan ties employee pay to the number of job-relevant skillsor academic degrees they earn?Multiple choice question.GainsharingPay for knowledgePiece rateSales commissionsThe distribution to employees of a percentage of the company's profits is known as______.Multiple choice question.sales commissionsprofit sharingstock optionsgainsharing

The distribution of savings to groups of employees who reduced costs and increasedmeasurable productivity is known as ______.Multiple choice question.

Like all compensation plans, competency-based pay has both advantages and disadvantages. The following are some examples of competency-based pay pros and cons to help you determine if this pay structure could work for your company

• Individual self-motivation: Instead of basing pay on seniority and job level, the employee achieves as much as they’re willing to and is rewarded for it.

• Company-wide motivation: Competency-based pay encourages a culture of self-motivation and self-improvement within the company. It can create a company of employees who are actively seeking to improve their skills and finding new ways to contribute to the company. Competency-based pay helps to tie your company’s culture directly to the success of the company.

• Increased transparency: Employees will better understand what they have the potential to earn with a competency-based pay system and what skills they need to acquire to reach the pay they desire. 

• Reduced turnover: Employee turnover is costly for a company, and a competency-based pay plan curbs that by helping employees feel that their skills and knowledge are important to the company, which improves retention.

• Greater pay subjectivity: As your company strays away from a traditional pay system, things become more open to interpretation and that brings subjectivity into the equation. The actions of an employee might not be judged correctly or, worse, they might be overlooked.

• Vulnerability to favoritism: Employees may start to see favoritism when one worker gets rewarded more than another. Employees might think that they are being treated unfairly and that their skills are not being recognized by the company.

• Inaccurate measurement of company needs: It’s tricky to determine which skills are important to a company or which skills translate to productivity. Since that’s the basis for this pay system, it may introduce more inaccuracy when gauging company needs.

As we mentioned above, a competency-based pay plan can be a great motivator for an employee and could help them take their work to the next level. Competency-based pay doesn’t follow the traditional paying system, but that’s it’s main advantage, too. It might just be the change that motivates your employees to improve.