An across the board increase of 8 effective from the

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An across-the-board increase of 8%, effective from the following month. In addition to this, a 2% salary increase for staff who have worked at the company for longer than three years. This is the first time the employer has been involved in union negotiations; until now, the workplace was not unionised. The employees are dissatisfied with this settlement, because the pension and medical aid deductions will leave them with less money in hand at the end of each month. They are also dissatisfied with the across-the- board increase because, in the past, increases were linked to performance and the better performers used to get higher increases. Instead of the 13 th cheque, the company also used to award two performance bonuses during the year - one at the financial year end (in June) and the other at Christmas. Susan Smith, the owner of the company, is, however, very happy since this settlement will decrease her labour costs and therefore increase profits. QUESTIONS 4.1 A compensation system should not only contain labour costs, but also should also aim at achieving other goals. Identify and briefly discuss these goals. (10) 4.2 Which of the goals are not addressed by the negotiated compensation strategy? Substantiate your answer. (5) 4.3 Explain how the policies and techniques in the pay model can assist the organisation in the case study to achieve all the goals of a compensation system. (35) Total[50]
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17 MNH306-K/101 . APPENDIX B- GUIDELINES FOR ANSWERING ASSIGNMENTS 03 & 04 ASSIGNMENT 03 QUESTION 3.1 The first step in the development of a total compensation strategy is to assess the total compensation implications of the strategy. Briefly describe the five factors in the organisation’s business strategy that contribute to its success. Use examples from the case study to illustrate the discussion. (20) Use study unit 2 as a point of departure for answering this question. You must explain the first step in the development of a total compensation strategy, concentrating on how these factors are illustrated by the case study. Give a theoretical discussion of the factors that are explained in the model and then give examples from the case study to support the theoretical discussion. You can also use exhibit 2.5 to support the discussion. QUESTION 3.2 With broader salary bands, will salaries not rise greatly as employees move to the top of their respective bands? Substantiate your answer by discussing the advantages and disadvantages of broad banding. (12) Use study unit 7 as a point of departure for answering this question. To focus your mind, give a brief definition or description of the term “broad banding”. Then discuss the advantages and disadvantages. You should give a yes or no answer only AFTER you have discussed the disadvantages and then substantiate your “yes” or “no” answer.
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