ACCA Financial Management (F9) Certification Practice Exam

What are remuneration incentives best described as?

1. Salary raises based on years of service

2. Performance-related pay and rewards

3. Standard pay without additional incentives

4. Fixed salaries with no bonuses

The correct answer is: Performance-related pay and rewards

Remuneration incentives refer specifically to pay and rewards that are tied to an individual's performance, achievements, or contributions to an organization. This can include bonuses, commissions, profit sharing, or other forms of compensation that are awarded based on how well an employee meets specific targets or objectives. Such performance-related pay is designed to motivate employees to improve their productivity and align their personal goals with the goals of the company. In contrast, options that suggest fixed salaries or raises based solely on tenure do not incorporate the element of performance. For instance, salary raises based on years of service do not necessarily incentivize improved performance; they simply reward time spent at the company. Similarly, standard pay without any additional incentives or fixed salaries with no bonuses lack the motivating aspect that remuneration incentives aim to provide. Therefore, the focus on performance in the correct choice emphasizes the role of remuneration incentives in driving employee motivation and aligning organizational and individual goals.