As director of compensation for BlueBottle Enterprises, you have implemented a highly successful pay-for-performance system. This system has worked successfully for three years as measured by a number of financial and non-financial measures. Because of this success you are considering quitting BlueBottle and setting up your own consulting firm to promote this system. Which of the following statements is TRUE?

Exam Question

As director of compensation for BlueBottle Enterprises, you have implemented a highly successful pay-for-performance system. This system has worked successfully for three years as measured by a number of financial and non-financial measures. Because of this success you are considering quitting BlueBottle and setting up your own consulting firm to promote this system. Which of the following statements is TRUE?

• 1. This will be a successful undertaking because effective pay-for-performance systems are translatable across industries.
• 2. You should target poor-performing firms as potential clients because most firms’ performance will be enhanced by a pay-for-performance system
• 3. As long as most employees will experience an increase in pay with this system, they will be satisfied with it
• 4. You need to have a way to evaluate organizational cultures in order to select the organizations in which your pay-for-performance system will be effective

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