What type of compensation structure pays workers a fixed rate for each unit produced?

What type of compensation structure pays workers a fixed rate for each unit produced?

• A. Salary
• B. Commission
• C. Piece work
• D. Hourly wage

Answer: (C)

The type of compensation structure that pays workers a fixed rate for each unit produced is referred to as piece work. This system is designed to incentivize productivity, as workers receive payment based on the actual quantity of units they produce, rather than a fixed salary or hourly wage. The key benefit of piece work is that it can motivate employees to increase their output since their compensation is directly linked to their performance. This type of arrangement is commonly used in manufacturing and other industries where output can be easily measured. In contrast, salary represents a fixed annual payment that does not fluctuate with production levels. Commission is typically based on sales, meaning that employees earn a percentage of the sales they generate rather than being rewarded for the number of units produced. An hourly wage pays employees for the time they work, independent of how much they produce. Each of these structures serves different business needs, but piece work specifically aligns pay directly with productivity, making it the correct answer in this context.

The type of compensation structure that pays workers a fixed rate for each unit produced is referred to as piece work. This system is designed to incentivize productivity, as workers receive payment based on the actual quantity of units they produce, rather than a fixed salary or hourly wage. The key benefit of piece work is that it can motivate employees to increase their output since their compensation is directly linked to their performance. This type of arrangement is commonly used in manufacturing and other industries where output can be easily measured.

In contrast, salary represents a fixed annual payment that does not fluctuate with production levels. Commission is typically based on sales, meaning that employees earn a percentage of the sales they generate rather than being rewarded for the number of units produced. An hourly wage pays employees for the time they work, independent of how much they produce. Each of these structures serves different business needs, but piece work specifically aligns pay directly with productivity, making it the correct answer in this context.