QUESTION 3 [25 Points]The definition of remuneration: “Payment or compensation received for services or employment. This includes base salary and any bonus or other financial benefit an employee or executive receives during employment.” (Source: Investopedia, 2014) The definition of reward: “The return for performing a desired behavior; positive reinforcement.”(Source: The free Dictionary, 2014) A compensation package consists of three components: a base salary and incentives as a reward for good performance, also known as direct compensation. Benefits such as medical care, allowances, and retirement funds are also known as indirect compensation. There are two types of rewards: extrinsic rewards and intrinsic rewards. According to Business Dictionary.com, “an employee expects extrinsic rewards and it does not lead to greater satisfaction”. An intrinsic reward is the job satisfaction an employee has when performing a job and performing to the best of his or her ability. There are three approaches to rewards. The carrot and stick approach, the delayed gratification approach and the prerogatives approach. The carrot and stick approach provides incentives and rewards in terms of performance and behavior. Deferred gratification is a promise of future rewards for current efforts, and the prerogatives approach represents rewards paid to employees as an entitlement. There are seven steps to developing a compensation and reward plan. The first step is to define the jobs and prepare a job description. The second step is to evaluate the jobs and group similar jobs together. The third step is to "price" the jobs according to established criteria (market rates). The fourth step is to calculate the average rate for each...... middle of paper ......0521.00Grade 5 R30638.00Promotions are made when an employee has performed and met certain requirements. This is measured using the Merit Increase Matrix. Merit Increase Matrix: Minimum Median Maximum Exceptional 6-7% 5-6% 4-5% Exceeds Expectations 5-6% 4-5% 3-4% Meets Expectations 4-5% 3- 4% 2-3% Intrinsic rewards offered throughout the year for growth and skill improvement: On-the-job training, leadership training, seminars, conferences and performance appraisals will be organized for employees grow and develop their skills. One reward program that has been developed for employees who perform to the best of their abilities is the profit sharing rewards program. This program allows employees to get a share of the organization's profits at the end of the year. Profit sharing: Grade 1 R1375.00 Grade 2 R504.00 Grade 3 R29500.00 Grade 4 R50335.00 Grade 5 R29087,50