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Pay Determination

For each of the following jobs, state whether you think the pay should emphasize base pay (wages/salaries) or incentive pay (bonuses, profit sharing and so on).

(a) An accountant at a manufacturing company

(b) A salesperson for a software company

(c) A chief executive officer

(d) A physician in a health clinic

Solution Preview

a -- base pay
b -- incentive pay
c -- base pay
d -- incentive pay (ideally, a combination of base pay and incentive pay)

A & C:

We can't give the accountant or the CEO a pay structure based 100% on incentives. It gives both the accountant and CEO too much incentive to manipulate earnings in order to receive their bonuses/extra pay. Most large companies have eliminated incentive pay for executives because of how much fraud takes place when they do. The companies ...

Solution Summary

This solution thoroughly discusses if the pay should emphasize base pay or inventive pay for each position given.