Question 1

Financial rewards are monetary incentives that an employee earns as a result of good performance. This
payment is expected as a result of the work the individual was hired to complete. These rewards are
aligned with organizational goals. When an employee helps an organization in the achievement of its
goals, a reward often follows. Financial rewards can be direct or indirect remuneration. Direct
remuneration such as basic salary, wage, Pay for performance, bonuses, commissions and vouchers.
Indirect remuneration paid by the organization such as pension, medical id, and various other
allowances regardless of the performance of the employee. The organizations in the scenario do seem
to award financial rewards to their employees as direct and indirect remuneration. The writer will
critically examine how financially rewards are awarded to the employees. In the case study,Financial
rewards are awarded as

i) Piece rate: method of payment according to how much you produce. Time rate: paid
according to hours worked. The organizations seems to remunerate the employees at a time
rate for example, in the scenario Nelson, an exempt employee was not paid overtime or on
call hours in his early days of employment, he managed to negotiate with BCA to get
R100.00 per hour on-call pay. BCA,in the scenario,also uses time rate in its ET programme,
For each hour an employee, works, up to 80 per pay period (monthly), an amount of ET is
deposited into their personal ET Account
ii) Performance related pay: Pay is related to performance for example, bonus and
commission. Performance for Pay programmes are designed to measure employees’
performance accurately while aligning pay such that it rises and falls in accordance with
variations in performance. The use of P4P being to motivate employees towards more
constructive behavior. From the scenario,Durbanville Medical Centre adheres to PRP as it
pays its employees` basic salaries on the 25th percentile to control, costs and to allow
proper rewarding plans for excellent performance In the scenario, BCA also discusses to
incorporate PRP as Performance pay (patient satisfaction) . In January and February2021
combined, Nelson worked more than 140 hours beyond his normal scheduled work week.
His salary was about R25, 000 extra month indicating performance related pay as Nelson
was remunerated for the extra hours he worked.
iii) Profit sharing: Aims at providing staff with a share of the firm for annual profit. Share
ownership is also very similar to profit sharing and it encourages the workers, managers and
shareholders to think as one. The organization does not seem to have profit sharing on its
lists of financial reward.
iv) Incentives of all forms whose two main goals are to motivate the employee to perform or
continue to perform better and to have a long lasting effect on their performance .Financial
incentives in the scenario given being, Gift card for healthy shoes Gel inserts for shoes, Free
snacks over weekends and evening shifts, Online fitness/yoga class vouchers, Sleep-centric
gift basket every quarter are awarded to the employees in the company.
v) Fringe benefits: In the scenario, at Durbanville Medical center, benefits are added to
distinguish between higher and lower level employees. Benefits offered to employees range
from medical aid to pension fund, study leave, and six (6) months paid maternity leave. At
BCA, Barb Johnson took a six-month paid maternity leave permitted under BCEA's
temporary disability programme. BCA introduced a programme called Earned Time (ET). ET
 combines traditional programmes of paid vacation time, paid legal and personal, holiday
time, and paid sick time into one "bank" of paid benefit time off.
vi) Compensation is also considered by the company, BCA, as a form of financial rewards as it
seems to be considering allowances such as, Night work allowance, Hazard allowance
(harmful working conditions), Special Pandemic allowance (Covid 19) .Also from the
scenario, Durbanville Medical Centre adheres to all legally, required benefits such as UIF and
Injuries on duty fees which are also financial rewards based on compensation.

Question 2

2.1. a) The business life cycle is the progression of a business in phases over time and is most commonly
divided into five stages mainly launch, h, growth, shake-out, maturity, and decline. DMC is still in its
product development phase (launch) .At this stage, funds from the initial start-up are typically used for
this phase, and if revenue is low and development costs are high, it can be a period of low cash flow for
the company. As evidence from the scenario, DMC, is not able to pay more than the average cost of
living adjustment of 4.5% annually.

b) Inform Barnes of the most appropriate remuneration approaches linked to their specific
Business life cycle stage [3 marks]. In your answer, critique DMC’s remuneration approach by
Providing appropriate examples from the scenario [6 marks].

Because the business is in its early cycle phase, launching phase though starting to grow, where the
workers are getting a limited salary, Barnes should employ an indirect remuneration approach
whereby he increases non-monetary remuneration benefits to retain employees and to allow them to
remain motivated such as long-term cash incentive plans,longterm retention agreements,traininand
development opportunities and work life balance .As indicated in the scenario work life balance is
lacking as Nelson is not allowed to take leave even though he has put in a lot of working hours
without taking leave. Barnes should employ a performance appraisal system that will enable to
award an employee for higher performance and hence motivate the employee to work even harder
despite the limited salary.

2.2 In the scenario it is indicated that DMC is paying basic salaries on the 25th percentile. From what
you Have learned about remuneration survey data, identify, [1 mark] and discuss [3 marks] the
remuneration policy that DMC have adopted. Support your answer with examples from the scenario.

DMC paying basic salaries on the 25th percentile suggests that because it is still in the early stages of its
business cycle, it cannot afford to pay remuneration at the 5Oth percentile, the market median DMC has
adopted the the flexible hybrid policy of remuneration as it allows the organization to remunerate its
employees below its market pay rate, as indicated by the scenario,DMC will therefore not be able to
pay more than the average cost of living adjustment of 4.5% annually although benefits are used to
distinguish between higher and lower employees(market lead).This type of policy allows DMC to follow
a lead policy with respect to certain positions such as awarding benefits according to rank, and a lag
policy on other positions such as basic salary remuneration.
QUESTION 3

Rank x
1 R1 600 000
2 R 1 650 000
3 R 1 810 000
4 R 2 100 000
5 R 2 500 000
6 R 3 000 000
7 R 3 500 000
8 R 4 000 000
Total 8 R20 160 000

Mean = ∑X/n ,n=8

= R20160000/8

=R2520000

Median is the value given by : (n4 + n5)/2

= (R2100000 +R 2500000)/2

=R 2 300 000

Percentile calculation:

Ordinal rank = (percentile/100) X total number of data points.

= (4/100) X 8

= 0.32

The value with the next rank to the ordinal rank is the required percentile is 1

Count the set to reach the above number. It is 1.

Therefore, the 4th percentile is R1 600 000.

b) The mean is often used as the reference point to determine whether the employer’s salary is below
or above the average market rate. It is used as basis of salary determination. The mean can be skewed
higher or lower by a few unusual values.

The median is the more representative figure, it provides more information about the distribution of
pay levels.

The percentile wage estimate is the value of a wage below which a certain percent of workers fall. The
4th percentile in this case indicates that 4 % of the employees earn less than R1600000 per annum.
will give the amount of dispersion or spread of the salary data set and describes the percentage of
salaries that fall below a particular figure.

c) From my observations in terms of the calculated values in (a) in terms of the mean and the

4th percentile, considering the CEO’s salary of R3 250 000, the salary is above the mean of R2520000
by a difference of R730000 and above the 4th percentile R1 600 000 by a difference of R1 650 000
which are very huge discrepancies.

3.2. Distinguish between discrimination [3 marks], pay discrimination [2 marks] and the pay gap [1

mark].

discrimination Pay discrimination Pay gap

These are practices that have
the effect of placing certain
individuals in a position of
subordination or disadvantage
in the labour market or the
workplace because of their
Discrimination where by a
different pay is given to the
same job, for example to a
female and male doctor with
the same qualifications,
seniority and responsibilities.
the difference between the
average pay of two different
groups of people, for example
men and women, the gender
pay gap
 race, color, religion, sex,
political opinion, national
extraction, social origin or any
other attribute which bears no
relation to the job to be
performed.
It can be direct or indirect
relatively easy to prove and
remedy
Discrimination when jobs,
different in content but of
equal value, receive a different
pay; for example when a
policeman (male job)
earns more than a nurse
(female job).

Discrimination is considered a labour market failure because it leads to prejudice, underutilization of

scarce human resources resulting in very slow patterns in growthrate.It deters innovation and
productivity.