A and d 2 a and b 3 c and d 4 c and e the correct

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a, and d 2 a, and b 3 c, and d 4 c, and e The correct answer is 3. See section 2.5 in the study guide. A compensation strategy will add value if it: attracts and retains the right human resource talents and potential compensates only behaviour which is in line with organisational strategy and goals controls the cost of compensation compensates employees in an ethical and fair manner Hence, options 1, 2 and 4 are incorrect. 14 Efficiency as a strategic compensation objective, aims to _______________ (a) improve employees’ performance (b) improve employees’ quality of life (c) control labour costs (d) emphasise business success The correct alternative is 1 c 2 c, and d 3 a, c, and d 4 a, b, c, and d The correct answer is 4. See chapter 1, “A pay model” in the prescribed book. The compensation objectives of the strategic pay model include efficiency, fairness and compliance. Efficiency refers to employees’ performance (option a), employees’ quality of life (option b), controlling costs (option c) and ultimately business success (option d). Options a, b, c and d are therefore all correct. 15 If you are appointed as an advising engineer in your company, according to what theory would you work harder if salaries of consultant engineers in your company were increased? 1 equity theory 2 tournament theory 3 institutional model 4 marginal revenue product The correct alternative is 2. See chapter 3, “Tournament theory: motivation and performance” in the prescribed book. Tournament theory states that the greater the differential between your salary and your boss’s, the harder you (and everyone else but the boss) will work. Rather than resenting the big salaries that consultants earn, engineers at all levels will work harder to be a “winner”, that is, to get promoted to the next level on the way to becoming consultants themselves. Within limits, the bigger the prize of getting to the next level of the structure, the greater the motivational impact of the structure. Equity theory states that employees judge the equity (fairness) of their pay by making multiple comparisons, for instance comparing their jobs with jobs similar to their own (internal alignment). The institutional model predicts that very few firms are “first movers” – they instead copy innovative practices after innovators have learnt how to make the practices work. Options 1, 3 and 4 are therefore incorrect.
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8 MNH306K/201 16 Study the figure below and then answer question 16. Downward momentum, continuous difficulties Think of pay as a circle. The above figure describes a (a) _____________ circle, and occurs when organisation performance (b) ______________; performance-based pay plans do not pay off, and there are no bonuses, and the value of their stock declines – with potentially (c) _____________ effects on organisation performance. Declining organisation performance (d) _____________ the risks facing employees – risks of still smaller bonuses, demotions, and so forth. Unless the increased risks are offset by (e) _____________ returns, the risk-return imbalance will (f) ____________; declining employee attitudes and speed up the downward spiral.
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