A plan offering 75% base salary and 25% incentives is classified as which type?
Correct answer D. Combination plan
Topic / 50 questions
Pay for Performance and Financial Incentives MCQs
Pay for Performance and Financial Incentives MCQs are multiple-choice questions on linking employee pay to results, covering incentive plans, variable pay, merit pay, recognition and motivation theories such as Herzberg's and Maslow's. They help HRM students and candidates for UGC NET, MBA, lecturer and HR officer tests. Each question shows its answer instantly for quick revision.
- Coaching, Careers and Talent Management 193
- Training and Developing Employees 77
- Managers Role in Strategic HRM 65
- Performance Management and Appraisal 63
- Pay for Performance and Financial Incentives 50
- Labor Relations and Collective Bargaining 35
- Introduction to Human Resource Management 33
- Benefits and Services 24
- Job Analysis 21
- Ethics Justice and Fair Treatment 17
- Managing Global Human Resources 13
- Human Resource Planning and Recruiting 11
- Interviewing candidates 10
- Employee Testing and Selection 9
What is the piecework pay plan often called?
Correct answer B. Individual pay plan
Which factors influence bonuses?
Correct answer D. All of the above
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Adding incentives to a job is a form of which type of motivation?
Correct answer A. Extrinsic motivation
What are all incentive plans focused on?
Correct answer B. Performance
The idea that a reward for performance must have some value to the employee is an example of what?
Correct answer D. Valence
Informal exchanges of praise and appreciation between employees and managers are an example of what?
Correct answer A. Social recognition program
Which managerial approach focused on improving work methods through observation and analysis of work?
Correct answer B. Scientific management movement
What is the pay plan called in which rewards are strictly proportional to production results?
Correct answer A. Straight piecework
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According to Herzberg, how are job working conditions classified?
Correct answer D. Hygiene factors
What is the principle that people are motivated by a sequence of needs arranged in a hierarchy called?
Correct answer B. Prepotency process principle
Frederick Herzberg and Abraham Maslow put forward theories of what?
Correct answer A. Motivation
What are plans designed to motivate employees’ short-term performance called?
Correct answer C. Annual bonus
How can managers support instrumentality?
Correct answer C. Easy incentive plans
What is the standard of output for a job called?
Correct answer D. Fair day’s work
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What is a reward given to workers whose work exceeds set standards called?
Correct answer C. Financial incentives
What is it called when a worker receives a premium for output above a set standard?
Correct answer A. Standard hour plan
An employee’s belief that successful performance will lead to rewards is best explained by which concept?
Correct answer B. Instrumentality
Which motivation theory explains the downside of extrinsic rewards?
Correct answer D. Edward Deci motivation theory
Public recognition, such as an award presented at an organised function, is best classified as an example of what?
Correct answer B. Non-financial rewards
About Pay for Performance and Financial Incentives MCQs
This category explains how organisations reward performance. Questions cover piecework and other plans where pay rises in strict proportion to output, merit pay for individual performance, variable pay linked to results, and organisation-wide plans tied to overall profitability, such as profit sharing. Non-financial rewards like praise and recognition programmes, and electronic monitoring of employees' work rate, are also tested. Each plan reflects a different balance between individual effort and shared organisational success.
Motivation theory forms the second strand. Questions ask about Maslow's hierarchy of needs, which arranges needs in sequence, and Herzberg's two-factor theory, which separates hygiene factors such as working conditions from motivators linked to higher-level needs. These ideas explain why incentive plans succeed or fail and appear regularly in HRM and organisational behaviour papers. Knowing them well also helps in case-style questions on reward design.
Key facts to remember
- Herzberg classed working conditions, pay and supervision as hygiene factors.
- Herzberg's motivators include achievement, recognition, responsibility and the work itself.
- Maslow's hierarchy places physiological needs at the base and self-actualisation at the top.
- Piecework pays employees a fixed rate for each unit they produce.
- Profit-sharing plans give employees a share of the company's overall profits.
Exams that include Pay for Performance and Financial Incentives MCQs
Pakistan
- FPSC
- PPSC
- NTS
- Lecturer tests
- Banking job tests
India
- UGC NET
- State PSC exams
- Campus placements
Bangladesh
- BCS
- Bank job exams
- Government job tests
How to prepare for Pay for Performance and Financial Incentives MCQs
- Sort incentive plans into individual, team and organisation-wide groups, with one example each such as piecework, gainsharing and profit sharing.
- Learn Herzberg's hygiene factors and motivators as two separate lists, since options often mix them to confuse you.
- Write Maslow's five levels in order from the base, because sequence questions on the hierarchy are very common.
- Distinguish merit pay, which raises base salary, from bonuses, which are one-off payments and must be earned again.
Frequently asked questions
What is pay for performance?
Pay for performance is a compensation approach in which part of an employee's pay depends on measured results rather than time worked alone. Examples include piecework, merit increases, sales commissions, team bonuses and profit-sharing plans. It aims to motivate effort and reward high achievers fairly.
How many Pay for Performance and Financial Incentives MCQs are on MCQs360?
MCQs360 has 50 MCQs in this category, each with an instant answer. You can practise free with no sign-up, alongside related HRM topics such as coaching, careers and talent management. Attempting a short set each day is an easy way to keep these concepts fresh before your exam.
Which exams include incentive and motivation MCQs?
These questions appear in HRM and management sections of FPSC and PPSC tests, business lecturer tests and banking job tests in Pakistan. In India they feature in UGC NET Management and Labour Welfare papers and campus placements. In Bangladesh they appear in BCS and bank job exams.
What is the difference between Herzberg's hygiene factors and motivators?
Hygiene factors, such as pay, working conditions, company policy and supervision, prevent dissatisfaction when adequate but do not by themselves motivate. Motivators, such as achievement, recognition, responsibility and growth, create real job satisfaction and drive higher effort. Herzberg argued both sets must be managed.
Last reviewed October 2026