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1 it must be benchmarked against industry best

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1 It must be benchmarked against industry best practices. 2 It must be internally aligned and externally competitive. 3 It must be aligned with business strategy and internal human resource systems. 4 It must provide a good return on the investment made in the compensation of top performers. 5 It must fit the compensation programme and overall business strategy in a way that is difficult to copy. The correct answer is 5. See “Differentiate” in the prescribed book. Pay strategies that are simple to copy does not provide a competitive advantage. The strategy should be different from anyone else’s. The pay strategy should be woven into the company’s overall HR strategy (ie it should be aligned). An aligned strategy supports differentiation in the strategy but does not ensure differentiation. It may be easy to copy any individual action of a competitor, but it is the way in which the programmes fit together and tie in with the overall organisation that is difficult to copy. Simply copying others by blindly benchmarking best practices amounts to trying to stay in the race, not win it. Options 1, 2, 3 and 4 are therefore not correct. 7 According to the information provided, which of the following forms of compensation are important to top- performing employees? (a) vacation leave (b) stock options (c) reserved parking (d) job freedom (e) bonuses The correct alternative is 1 a, b, c, 2 b, c, e 3 a, b, c, d 4 b, c, d, e 5 a, b, c, d, e The correct answer is 5. See “Forms of pay” in the prescribed book, figure 1.1 in the study guide and the information in the paragraph. “What kind of rewards do top performers prefer? Their choices include a mix of short-term, immediate rewards,
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6 MNH306K/201 long-term rewards, nonmonetary and intrinsic rewards. They also prefer that their compensation should be tailored to reflect their individual contribution.” Bonuses are short-term, immediate rewards. Stock options are long-term incentives. Reserved parking and job freedom are intrinsic rewards and vacation leave is a non-monetary reward. Options a, b, c, d, and e are therefore all correct. 8 In addition to base salary, how should you structure the rest of the compensation package for top performers to ensure that it provides a sustained competitive advantage? 1 merit bonuses, standard benefits, overtime and stock options 2 commission, standard benefits, a large office and reserved parking 3 standard benefits, generous overtime, stock options and profit sharing 4 opportunity for personal growth, stock options, bonuses and an impressive title 5 interesting work, flexible work hours, a secretary and an impressive title The correct alternative is 1 a, b, c 2 b, c, d 3 a, b, c, d 4 a, b, c, e 5 a, b, c, d, e Because there is a mistake in the question, all students were given credit for it.
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