Human Resources Certification Institute (HRCI) Practice Exam

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Ace your HRCI certification with our comprehensive practice exams. Featuring detailed questions with hints and explanations, our tests are designed to prepare you thoroughly for your big day.

Practice this question and more.

The president of the company you work for wants to embark on a cost savings initiative throughout all departments. All employees will receive a percentage of the savings at the end of the year. This is an example of what type of compensation program?

Deferred compensation
Gain-sharing
Discretionary bonus
Commission

The correct answer is: Gain-sharing

This is an example of a gain-sharing compensation program, where all employees will receive a percentage of the cost savings at the end of the year. This is different from deferred compensation, which is when an employee receives compensation at a later date, such as through a retirement plan. Discretionary bonuses are typically a one-time, non-guaranteed payment based on the employer's discretion, while commissions are typically based on sales or performance targets. In this scenario, the employees are not receiving a set or variable commission, but rather a portion of the overall cost savings achieved by the company. Therefore, gain-sharing is the most appropriate type of compensation program being described.