HRMT3501

THE COUNCIL OF COMMUNITY COLLEGES OF JAMAICA

BACHELOR OF SCIENCE EXAMINATION

SUMMER SEMESTER – 2019 AUGUST

PROGRAMME: BUSINESS ADMINISTRATION

COURSE NAME: COMPENSATION MANAGEMENT SYSTEMS

CODE : HRMT3501

YEAR GROUP: THREE

DATE: THURSDAY, 2019 AUGUST 15

TIME: 9:00 A.M. – 11:00 A.M.

DURATION: 2 HOURS

EXAMINATION TYPE: FINAL

This Examination Paper has 4 Pages

INSTRUCTIONS:

1. ANSWER ALL QUESTIONS FROM SECTION A

2. ANSWER ANY TWO (2) QUESTIONS FROM SECTION B

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

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SECTION A

Instruction: In the booklet provided, answer ALL questions in this section.

COMPENSATION PHILOSOPHY AT AT&T

This company believes that the compensation programme for executives at AT&T should be
designed to attract and retain them for a long period. The compensation philosophy provides a
strong link between achievement of overall company objectives and an executive’s total earning
opportunity. Core principles of this philosophy include competitive compensation opportunities,
performance-based payments and that a significant portion of the total compensation opportunity
should be equity-based (Board Compensation Committee Report on Executive Compensation).
The current compensation philosophy of AT&T is effective in terms of attracting and retaining
employees and high-calibre management personnel. It is also effective as it helps the company to
motivate employees to enhance their performance towards achieving overall organisational goals
and objectives. Compensation provided is externally competitive and internally equitable. All
these are helpful for AT&T to reduce its employee turnover rate and build a sustainable
competitive advantage in the market.

Compensation Philosophy case 2016 May 20

/www.assignmenthelpexperts.com

Question 1

A. Describe THREE (3) compensation philosophies at AT&T, with examples

of how these will enhance the company’s goals. (9
marks)

B. What are TWO (2) additional compensation philosophies that AT&T can
benefit from? (6
marks)

C. State FIVE (5) factors that affect compensation. (5

marks)

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(Total 20 marks)

END OF SECTION A
SECTION B

Instruction: In the booklet provided, answer any TWO (2) questions from this section.

Question 1

A. Describe the following theoretical perspectives with application to

compensation:

i. Adam’s Equity Theory

ii. Herzberg’s Two-factor Theory (16

marks)

B. Discuss the impact of TWO (2) new and emerging trends in

compensation management. (10
marks)

C. Comment on compensation as a strategic tool. (4

marks)

(Total 30 marks)

Question 2

A. Explain the term ‘salary survey’. (3

marks)

B. Describe FIVE (5) ways in which a salary survey is important to an

organisation. (10
marks)

C. List FOUR (4) job evaluation methods and examine any THREE (3). (13
marks)

D. Assess the purpose of a compensation management policy. (4 marks)

(Total 30 marks)

Question 3

A. Elaborate on ‘pay policy’ and the methodology used in its development. (6 marks)

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B. Consider FOUR (4) issues in the development of a pay policy. (20

marks)

C. Discuss TWO (2) benefits of a pay policy to a company. (4

marks)

(Total 30 marks)

Question 4

A. Differentiate between ‘dismissal’ and ‘termination’. (6 marks)

B. Discuss legal issues that can affect the dismissal of an employee. (10 marks)

C. Outline steps an HRM practitioner must take to avoid the legal issues
identified at B. Provide relevant examples. (14 marks)

(Total 30 marks)

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END OF EXAMINATION
THE COUNCIL OF COMMUNITY COLLEGES OF JAMAICA

BACHELOR OF SCIENCE EXAMINATION

SUMMER SEMESTER – 2019 AUGUST

PROGRAMMES: BUSINESS ADMINISTRATION

COURSE NAME: COMPENSATION MANAGEMENT SYSTEMS

CODE : HRMT3501

YEAR GROUP: THREE

DATE: THURSDAY, 2019 AUGUST 15

TIME: 9:00 A.M. -11:00 A.M.

DURATION: 2 HOURS

EXAMINATION TYPE: FINAL

SOLUTIONS

SECTION A

Question 1

Question 1
Discuss three (3) Compensation Philosophies of AT&Ts giving example of how it will enhance
thecompany’s goals. (12 marks)
4 marks for each point given. (3x4= 12 marks)
Students should write on the following:

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AT&T’s Compensation philosophies are:

 competitive compensation opportunities
 performance based payments
 significant portion of the total compensation opportunity should be equity-based
payment.
Any other to identified that attract and retain staff
Examples provided should be in keeping with the philosophies identified.

Question 2
Outline two (2) additional Compensation Philosophies that AT&T Company can benefit from.
(8marks)
4 marks for each correct answer 4x2=8
Students can write on any of the following:
 Team Based pay this encourages team work.
 Education assistance while paying for skills according to market value or close to.
 Health Care incentives and or employee wellness plan
Any addition can be suggested and determined by the marker to be correct.

Question 3
State five(5) factors that affect compensation. (5 marks)
students can write on any five of the following 1 mark each.
Internal factors-Ability to pay, business strategy, Job evaluation and performance Appraisal,
employee performance.
External factors-labour market, going rate in the industry, productivity, cost of living, labour law,
labour unions.

SECTION B

Question 1

Describe the following theoretical perspectives with applications to Compensation:

(16marks)
(ii) Adam’s Equity Theory: Equity theory is based in the idea that individuals are motivated by
fairness, and if they identify inequities in the input or output ratios of themselves and their
referent group, they will seek to adjust their input to reach their perceived equity. Adams
suggested that the higher an individual's perception of equity, the more motivated they will be
and vice versa: if someone perceives an unfair environment, they will be de-motivated
(iii) Herzberg’s Two-factor Theory: Motivator factors – Simply put, these are factors that lead
to satisfaction and motivate employees to work harder. Examples might include enjoying your
work, feeling recognised and career progression. Hygiene factors – These factors can lead to
dissatisfaction and a lack of motivation if they are absent. Examples include salary, company
policies, benefits, relationships with managers and co-workers.
Four (4) marks will be awarded for detail discussion

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(B) Discuss two (2) new and emerging trends in compensation management. (10marks)
Insurance Scheme, Company Leased, accommodation.
Two (2) marks for each identified and 4marks for discussion.
(C) Describe Compensation as a strategic tool.
Compensation, a key strategic area for organizations, impacts an employer’s ability to attract
applicants, retain employees, and ensure optimal levels of performance from employees in
meeting the organization’s strategic objectives. Compensation has been advocated by some
recently as a tool for enhancing organizational performance and sustained competitiveness.
Contemporary approaches to compensation emphasize the importance of aligning employee
behaviors to the strategic direction of the organization.
Four (4) marks will be awarded for detail discussion

Question 2

a). Explain the term ‘salary survey’ (3 marks)

Salary Surveys are tools used to determine the median or average compensation paid to
employees in one or more jobs. Compensation data, collected from several employers, is
analyzed to develop an understanding of the amount of compensation paid. Surveys may
focus on one or more job titles, geographic regions, employer size, and or industries. Salary
surveys may be conducted by employer associations (e.g., SHRM), survey vendors, or by
individual employers.
b) Describe five (5) importance of salary survey to organizations. (10 marks)
Salary surveys serve many purposes, ranging from wage determination to competitiveness
in the marketplace to internal salary equity concerns as they arise. Let's take a look at
some other benefits of salary survey usage:
1. Salary surveys help determine wage levels, or how much you'll pay for certain
positions.
2. Salary survey, a business is able to strategically determine various wage levels
based on the market rate for the type of job performed, responsibilities, education level,
experience, and other components. By doing this, an organization is able to set its salary
structure company-wide, which can help decide how many and what types of employees
can be hired.
3. Salary surveys help uncover wage trends, or fluctuations in compensation. Over
time, with changes in the job markets as well as supply and demand, the numbers in a
salary survey will change, fluctuating up or down based on need and importance.
4. Salary Survey can identify compensation structure.
5. Salary Survey can be used in internal wage decision.

c). List four (4) job evaluation methods and explain any three (3) methods.
 Ranking Method
 Job Classification Method
 Factor Comparison Method
 Point – Ranking Method
(14 marks)

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d). Explain the purpose of a compensation management policy. (3 marks)

The purpose of the compensation policy is to provide guidelines for establishing and
administering a compensation plan for Professionals, Professional Faculty and Operational
Employees.

(Total 30 marks)

Question 3

(a) Explain what is a “pay policy” and describe the methodology used in its development.
(6 marks)
Pay Policy: Document created and posted on intranet, copy given to all staff, explaining the
company’s position on compensation and how existing policies can be changed. (3 marks)
Methodology: Use the committee method with representatives from all levels of company so
that they may understand what is a pay policy, and that their major concerns may be reflected
there in. (3marks)

(b) Discuss four issues to be considered in the development of a pay policy (20 marks)
 Pay related Issues:
 policy governing type of compensation used;
 how the amounts are to be arrived at,
 whether to lead, lag or match, secret or open pay,
 seniority based or performance driven
 types of benefits to be offered and how they are to be achieved, ratio of
 base to variable pay, criteria for measuring work done.’
 External vs internal equity,
 Impact of environment on compensation.,
 Legality of policies, payment days, use of credit card, lodgement of salaries,
Statutory deductions Etc.
(c) Discuss two the benefits to a company in having a Pay policy. (4 marks)
Benefits:
 Common knowledge
 Unions can enforce implementation and discourage breaking of it.
 Relevant, providing a participatory methodology was used in compiling it.
 Reduce industrial action and suits taken out against company

Question 4

a). Differentiate between dismissal and termination. (4 marks)

a. Differentiate between dismissal and termination. (4 marks)

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Termination is an end of contract, whereas, in dismissal, the employee can be acquitted of

his charges by a court and reinstated back to his job. In termination, there are no benefits
for the employee while there may be some benefits allowed by the management in the case
of dismissal. Dismissal is a sort of punishment for a delinquent employee in case of lost of
trust in employee performance.

b). Discuss the legal issues that can affect the dismissal of an employee. (9 marks)
b. Discuss the legal issues that can affect the dismissal of an employee. (9 marks) 
Noncompliance with the law (employment and termination act)  Discrimination  Equity
 Have any of the employee right been breached (contract, promises etc.)  Have the
companies dismissal and termination policy been followed.

c). Outline the steps a HRM practitioner must take to avoid the legal issues identified
in b. Provide relevant examples. (12 marks)
c. Outline the steps a HRM practitioner must take to avoid the legal issues identified in b.
Provide relevant examples
 Set up employment policies and dispute resolution procedures that make
employees feel treated fairly.
 Do the preparatory work that helps to avoid legal issues such as following
the steps for employee dismissal: i. Feedback on performance ii.
Employee training

iii. Documentation
 Comply with the law.
 Comply with the contractual arrangement stated or implied by the firm
via its employment application forms, employee manuals, or other
promises.

(Total 30 marks)

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