'A and B work in a garment factory. B always earns a higher wage than A as he produces more units of output.'

Identify the type of financial incentive being adopted by the company.

Productivity linked wage incentives

The correct answer is option 2- Productivity linked wage incentives.

The type of financial incentive being adopted by the company is "Productivity linked wage incentives." This system rewards employees based on the amount of output or productivity they contribute. Since B earns a higher wage due to producing more units of output compared to A, it indicates that the company ties wages to productivity levels.

Productivity linked wage incentives: Several wage incentive plans aims at linking payment of wages to increase in productivity at individual or group level.

OTHER OPTIONS

• 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.

• Profit sharing- Profit sharing is meant to provide a share to employees in the profits of the organisation. This serves to motivate the employees to improve their performance and contribute to increase in profits.

• Co-partnership- Under these incentive schemes, employees are offered company shares at a set price which is lower than market price. Sometimes, management may allot shares in line of various incentives payable in cash. The allotment of shares creates a feeling of ownership to the employees and makes them to contribute for the growth of the organisation.