Question 1
a) Salary (2 marks)
A salary is a fixed regular payment made by an employer to an employee, typically expressed on an annual basis but paid in monthly, biweekly, or weekly installments. It compensates the employee for their work and is often determined by factors such as the employee's role, experience, education, and the industry standards.
b) Reward system (2 marks)
A reward system refers to a structured framework within an organization that outlines how employees are compensated for their contributions and performance. It encompasses various forms of incentives, including monetary rewards (such as salary, bonuses, and commissions) and non-monetary rewards (such as recognition, career development opportunities, and benefits) designed to motivate and retain employees.
Question 2
Five qualities of a successful performance-related system (5 marks):
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Clarity of Objectives: The system should have clearly defined goals and performance criteria that align with organizational objectives, so employees understand what is expected of them.
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Fairness and Equity: Performance evaluations should be fair and impartial, ensuring that employees are measured against the same standards regardless of their background or circumstances.
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Consistency: The system should be applied consistently across the organization to provide uniformity in how performance is assessed and how rewards are distributed.
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Timeliness: Feedback and rewards should be provided in a timely manner, ensuring that employees receive recognition for their performance soon after it happens.
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Employee Involvement: Employees should be involved in the development and maintenance of the performance-related system to ensure it is relevant, accepted, and effectively motivates them.
Question 3
Five strategic approaches to compensation and reward systems (5 marks):
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Market-Based Approach: Establishing compensation levels based on the market rates for similar roles within the industry to attract and retain talent.
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Performance-Based Approach: Linking rewards and compensation directly to employee performance and contributions through bonuses, commissions, and merit increases.
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Skill-Based Pay: Offering compensation based on the acquisition of skills or competencies, encouraging employees to develop their capabilities and enhance overall productivity.
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Team-Based Rewards: Designing compensation structures that reward team performance, fostering collaboration and collective accountability among employees.
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Total Rewards Strategy: Considering a holistic view of employee rewards that goes beyond salary to include benefits, work-life balance, recognition programs, and career development opportunities to enhance overall employee satisfaction and engagement.