Which of the following statements about financial incentives is correct?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Financial incentives are in direct monetary form or measurable in monetary terms.
Option (1) Financial incentives are in direct monetary form or measurable in monetary terms. — True. Financial incentives are those in direct monetary form or measurable in money. They motivate people for better performance.
Option (2) Salary, the basic monetary incentive, includes basic pay, dearness allowance and perquisites. — False. Salary includes basic pay, dearness allowance and other allowances. Perquisites such as car allowance and housing are given over and above the salary, so they are not part of it.
Option (3) Under profit sharing, employees are offered company shares at a set price lower than the market price. — False. Offering company shares at a price lower than the market price is co-partnership or stock option. Profit sharing gives employees a share in the profits of the organisation.
Option (4) Bonus is an incentive offered as a part of the basic salary of the employees. — False. Bonus is offered over and above the wages or salary. It is not part of the basic salary.
NCERT (2026-27 Edition): “Financial Incentives … Financial incentives refer to incentives which are in direct monetary form or measurable in monetary term and serve to motivate people for better performance. These incentives may be provided on individual or group basis. The financial incentives generally used in organisations are listed below: “(v) Co-partnership/ Stock option: Under these incentive schemes, employees are offered company shares at a set price which is lower than market price. …” “(vii) Perquisites: In many companies perquisites and fringe benefits are offered such as car allowance, housing, medical aid, and education to the children, etc., over and above the salary. These measures help to provide motivation to the employees/ managers.” |