Which of the following is a direct example of a contingency reward?

• A. Annual salary increase given regardless of performance
• B. A merit increase based on performance
• C. Punishment for lateness
• D. Promotion based on tenure

Answer: (B)

The idea being tested is how rewards are conditioned on performance outcomes. A contingency reward is granted only when a specific condition is met, typically tied to performance. A merit increase based on performance fits this because it’s awarded due to meeting or exceeding performance criteria, directly linking the reward to the employee’s results.

The other scenarios don’t fit the idea of a contingent reward: a pay raise that happens regardless of performance isn’t conditioned on achieving targets, a punishment for lateness is a negative consequence rather than a reward, and a promotion based on tenure rewards time served rather than how well the person performs.