9 “I don’t work for the money; I do this work because I enjoy it and find it interesting.” In terms of employee compensation, this is an example of _____________________. 1 direct compensation 2 nonfinancial rewards
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6 MNH306K/201 3 intrinsic rewards 4 indirect compensation The correct answer is 3. See figure 1.1 in the study guide and “Relational returns from work” (chapter 1) in the prescribed book. Compensation of employees consists of intrinsic rewards (relational returns) and extrinsic rewards. Intrinsic rewards are intangible rewards that have a substantial effect on employee behaviour. Options 1, 2 and 4 are therefore incorrect. 10 The first step in developing a total compensation strategy is: 1 implement strategy. 2 map a total compensation strategy. 3 assess total compensation implications. 4 determine business needs. The correct answer is 3. See chapter 2, “Developing a total compensation strategy: four steps” in your prescribed book. It is necessary to think about the company’s past, present and future – the factors that contributed to its success, and which are likely to become more or less important. Hence, options 1, 2 and 4 are incorrect. 11 In the current economic climate, unions are negotiating for, and organisations are offering, higher salary increases than in the previous two years. This can be ascribed to the steep rise in cost of living. In terms of competitive advantagethis is an example of the following: 1 Aligning the compensation strategy with economic and socio-economic conditions. 2 Differentiating compensation strategy from those of competitors. 3 A good return on the investment made in salaries and incentives. 4 Aligning the compensation strategy with the organisation’s business strategy. The correct answer is 1. See chapter 1, “Source of competitive advantage: three tests” and “Align” in the prescribed book. Alignment of the pay structure consists of three actions: •Align it with the business strategy •Align it externally with the economic and socio-political conditions •Align it internally with the overall HR systems 12 The management of a pay system is about ensuring that _________________________. 1 the union agreement is implemented conscientiously 2 employees are productively engaged 3 the right people get the right pay for achieving the right objectives in the right way 4 compensation costs are kept to a minimum The correct answer is 3. See chapter 1, “Four policy choices” and “Management” in the prescribed book. The traditional focus on how to administer various techniques is something of the past, and has been replaced by more strategic thinking – managing pay as part of the business. Options 1, 2 and 4 are therefore incorrect. 13 A compensation strategy adds value when it _____________. (a) provides incentives for time spent at work (b) provides automatic yearly increases in benefits (c) attracts and retains talented staff with potential