CHRP Knowledge Exam · Question
Which term describes a compensation system that ties a portion of an employee's pay to the company's overall financial performance?
Profit sharing is a group incentive plan where employees receive a share of the company's profits, directly linking their compensation to organizational success
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Question: Which term describes a compensation system that ties a portion of an employee's pay to the company's overall financial performance?
Answer options: ✅ Profit sharing
- Spot bonuses
- Cost-of-living adjustment
- Commissions
Correct answer: Profit sharing
Explanation: Profit sharing is a group incentive plan where employees receive a share of the company's profits, directly linking their compensation to organizational success. Commissions are individual sales-based incentives.
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