Human Resources Certification Institute (HRCI) 2025 – 400 Free Practice Questions to Pass the Exam

Question: 1 / 400

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

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.

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Discretionary bonus

Commission

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