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IOP3706 EXAM PACK 2023
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IOP3706EXAM
PACK
2023
,IOP3706 EXAM PACK
May /June 2016
1(a) Discuss the various purposes of reward and remuneration
Reward and remuneration aims to achieve the following organisational goals
Recruiting high quality employees and retaining their services in the
organisation
Improving employee performance
Ensuring fairness-both internal and external equity, procedural justice
and distributive justice
Ensuring legal compliance –controlling labour costs
Motivating staff
(b) Discuss factors in the internal and external environment that
influence the compensation of workers (15) (pgs 278-280)
External Environment
(a) Legislation
In SA labour legislation addresses most aspects of remuneration
Wage agreements, bargaining councils ,statutory council
agreements at the organisational level may determine wage
level in industries
Labour Relations Act 66 (1995)
Basic Conditions of Employment Act 75 (1997)
(b) Labour Unions
, Labour union affects the compensation levels, the freedom of
organisations to offer pay increases and the type of benefits
allowed and the willingness of the organisational members to
participate in incentive programme.
(c) Labour Market
Labour market affect wage and salary structure through the
supply of labour
The relationship between labour supply and demand influences
internal and external pay equity
Shortages in labour market provide those who are qualified to fill
the jobs with an opportunity to negotiate better terms of
employment.
(d) Globalisation
Emergency of a global marketplace impact on the traditional
ways in which works managed and how employees are
remunerated, which raises the issue of global pay.
It also leads to international organisations, which implies various
employees in different countries
Perception, pay is determined by marketplace that reflects a
common set of values unique to each country.
The forces of competition in open global markets are detectable
There is therefore a focus on customer services as a
differentiating factor in reward systems
Most multinational companies view the global marketplace
within the context of the company’s own strategic plans and
response to competition on a global scale.
Multinational organisations look at the global marketplace and
seek to develop synergistic approaches that maximise the best
, remuneration practices and apply them to the highest degree
possible in local markets
(e)Economic Influences
Increase in salaries and wages show a direct correlation with
high inflation, low unemployment or the short supply of a specific
type of an employee.
As availability of money decreases ,organisations find it difficult
to afford to pay increases, additional benefits or bonuses
Pay levels rise slowly during the periods of high unemployment
when labour is abundant.
Increases in the cost of living also have a substantial impact on
pay levels.
Internal Environment
Organisational Factors
A factor in reward management is the organisation’s ability to pay high
salaries and wages.
Organisations differ in terms of their resources, goals and composition,
and this affects the amount and type of remuneration given.
An organisation facing a strong financial future may offer more
generous pay increases to employees than an organisation that faces
possible cut backs, constraints and insecurities.
Another organisational factor is the internal labour market which is a
series of related jobs within the organisation.
Internal labour market tends to develop pay rates that are unique to
specific organisation that is different from the external labour market.
Wages and specific skills and the internal labour market they create,
influence each other reciprocally.
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