Question

summarize the statement below
The two business strategies that are considered in developing compensation systems
are: Efficiency focused strategy and Minimum costs strategy.
(a) Efficiency Focused Strategy: Efficiency theory assumes that
efficiency increases when the organisation emphased on hiring better
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Compensation and Reward Systems D-CS 01 Unit 2
©2009 BOCODOL
employees and motivating the present employees to work harder. Scholars
have argued that organisations must have compensation systems, which can
support effective and efficient strategies geared towards attracting high
quality applicants.
(b) Minimum costs strategy: Organisations employ different methods towards
the costs of labour, in order for them to maximise economies of scale. This
method of cutting down expenditures on labour costs is not done by lowering
the salaries of employees but hence uses other schemes such as profit sharing
and gain sharing. The latter gives the employees a steak or shares in the
company profits.

Answer 1

The statement outlines two business strategies for developing compensation systems:

1. **Efficiency Focused Strategy**: This approach posits that organizational efficiency is enhanced by hiring high-quality employees and motivating existing staff to work harder. It emphasizes the need for compensation systems that attract top talent to support effective strategies.

2. **Minimum Costs Strategy**: This strategy aims to reduce labor costs to achieve economies of scale without directly lowering employee salaries. Instead, it employs methods like profit sharing and gain sharing to incentivize employees by allowing them to benefit from the company's profits.