Incentive Compensation Plans: Merit Pay, Piece Rates, Commissions, Bonuses & Skills-Based


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question 1 of 3

Bob's annual performance review showed a marked improvement in his productivity. As a result, he is given a raise. Why is this an example of merit pay?

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1. Cathy works as a stylist cutting hair. She gets paid for each haircut. Why is this example of piecework?

2. David sells shoes in a retail company. His boss agreed to pay him a commission for each pair of shoes he sells. Which of the following statements is an example of what his boss promised?

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About This Quiz & Worksheet

Looking at how to get paid rather than just from an hourly wage, this quiz and corresponding worksheet will help you gauge your knowledge of various incentive compensation plans. Topics you'll need to know to pass the quiz include understanding what happens if someone keeps their salary in line with the rate of inflation as well as knowing examples of merit pay.

Quiz & Worksheet Goals

Use this printable worksheet and quiz to test your knowledge of the following incentive compensation plans:

  • Merit pay
  • Commission
  • Piecework
  • Skills-based pay

Skills Practiced

This worksheet and quiz will let you practice the following skills:

  • Interpreting information - verify you can read information regarding the type of pay for each piece of work and interpret it correctly
  • Knowledge application - use your knowledge to answer questions about commission and merit based pay
  • Reading comprehension - ensure that you draw the most important information from the related incentive compensation plans lesson

Additional Learning

To learn more about how your performance can lead to a heavy wallet, review the corresponding lesson called Incentive Compensation Plans: Merit Pay, Piece Rates, Commissions, Bonuses & Skills-Based. This lesson will help you:

  • Understand what an incentive compensation plan involves and identify examples
  • Describe the importance of meeting goals in performance-based pay
  • Show how an employer can reward an employee at a single time for meeting a goal
  • Appreciate the characteristics of each type of pay-for-performance plans