Which compensation method rewards employees for acquiring new skills or education?

The choice of "Pay for Knowledge" is correct because this compensation method is specifically designed to reward employees for increasing their skill sets or educational qualifications. In organizations that implement pay for knowledge, employees receive additional compensation as they acquire new competencies relevant to their jobs. This approach encourages continuous learning and development, aligning employee skills with organizational needs. By incentivizing employees to pursue training and education, companies not only enhance their workforce's capabilities but also boost overall organizational performance.

In contrast, gainsharing focuses on sharing financial gains from productivity improvements with employees, piece-rate incentive compensations are based on the amount of work completed or output produced, and cash plans generally refer to straightforward cash bonuses or rewards without a clear emphasis on skill acquisition or education. Therefore, pay for knowledge distinctly supports the idea of rewarding employees for their professional growth, making it the most appropriate choice.