Question 3: Outline five strategic approaches to compensation and reward systems. (5 marks)
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Market-Based Approach: This strategy involves aligning compensation with the external market rates for similar roles, ensuring competitiveness to attract and retain talent.
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Performance-Based Pay: Rewarding employees based on their performance contributes to motivating higher productivity and aligning individual contributions with organizational goals.
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Skill-Based Pay: Employees are compensated based on the skills they possess rather than the job they currently hold, encouraging continuous learning and skill development.
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Total Rewards Strategy: This holistic approach encompasses not only salary but benefits, work-life balance, recognition, and career development opportunities, promoting overall employee satisfaction.
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Job Evaluation and Pay Equity: Establishing a clear and fair job evaluation process ensures that pay structures are equitable based on the value of the job, internal equity, and external market competitiveness.
Question 4: List five constraints of the compensation system. (5 marks)
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Budget Limitations: Organizations often have fixed budgets that restrict the amount available for compensation, limiting how much they can offer.
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Legal Constraints: Laws and regulations related to minimum wage, overtime pay, and equal pay create constraints that organizations must adhere to.
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Market Conditions: Economic factors such as inflation, unemployment rates, and industry competition can influence compensation strategies, often necessitating adjustments.
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Organizational Structure: The existing hierarchy and culture within an organization may impose constraints on how compensation is structured and applied.
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Internal Equity: Maintaining fairness and equity among employees can limit how much variation is allowed in pay, especially for similar roles within the organization.
Question 5:
a. What is meant by business strategy? (1 mark)
Business strategy refers to the plan an organization formulates to achieve its long-term goals and objectives, outlining how resources will be allocated and competing aspects within the market landscape will be addressed to ensure success.
b. Give the stages that business strategy development depends upon? (5 marks)
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Environmental Analysis: Assessing external and internal environments to identify opportunities, threats, strengths, and weaknesses (SWOT analysis).
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Vision and Mission Formulation: Defining the organization's purpose, vision, and core values to provide direction for strategic initiatives.
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Setting Objectives: Establishing specific, measurable, achievable, relevant, and time-bound (SMART) objectives that the strategy aims to achieve.
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Strategy Formulation: Developing the actual strategy that outlines the paths and methods for achieving set objectives, including resource allocation.
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Implementation and Evaluation: Executing the strategy and continually assessing its performance to ensure alignment with the organization's goals and making necessary adjustments.
Question 6: Outline any five factors to be taken into consideration when using an integrated approach to pay structure. (5 marks)
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Organizational Goals: The pay structure should align with the overall goals and mission of the organization, ensuring that compensation strategies support strategic objectives.
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Employee Performance: Evaluating how performance measurement systems are integrated with compensation to ensure high performers are rewarded appropriately.
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Market Competitiveness: Understanding market salary benchmarks is vital to ensure the pay structure is competitive enough to attract and retain talent.
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Job Health and Value: Assessing the relative worth of various roles within the organization through job evaluations to establish fair and equitable pay.
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Employee Engagement and Satisfaction: Considering how the pay structure impacts employee morale, engagement, and job satisfaction to foster a positive workplace culture.
1 answer