True or false: Setting compensation incentives involves finding the right balance between risk and insurance.1 pointTrueFalse

Statement Analysis

The statement asserts that setting compensation incentives is about balancing risk and insurance.

Discussion

1. Compensation Incentives: These are financial rewards or benefits designed to motivate employees to achieve specific goals or perform in certain ways. They can include bonuses, stock options, profit-sharing, and other forms of payout based on performance.

2. Risk and Insurance: In a corporate context, "risk" refers to the uncertainty that comes with business decisions, while "insurance" relates to measures taken to mitigate that risk. Balancing these two involves ensuring that the incentives motivate employees to take appropriate risks without exposing the company to undue danger.

3. True or False?: The concept of balancing risk and insurance is indeed relevant in the context of compensation incentives. Organizations need to structure their incentives carefully to promote desired behaviors while protecting themselves from excessive risk-taking.

Conclusion

Therefore, the statement can be evaluated as True. Setting compensation incentives does involve finding the right balance between risk and insurance. This ensures that employees are appropriately motivated while the organization remains safeguarded against potential losses associated with risk.