1- Show the concept of a "just-meaningful pay increase."

A successful answer should contain several elements. First, a student should discuss the notion of perception. The pay increase must be seen by employees as making a meaningful change in compensation. A discussion of equity theory would be appropriate. Second, students should discuss cost-of-living differences among individuals. Students may also want to discuss the link between pay and motivation. Will the pay increase necessarily have the performance effects a company is looking for?

2- A company of 15 employees has recently decided to overhaul its performance appraisal system. Which plan would be most appropriate for the company to adopt? Why?

An answer should consider why the size of the company is of importance in considering the adoption of a performance appraisal plan. Further, the students should discuss the relative merits and liabilities of the different categories of performance appraisal methods (trait systems, comparison systems, behavioral systems, and goal-oriented systems). Students may also consider the supervisors' appraisal approaches as well as the compensation specialists' skills in designing and implementing such plans. The corporate and compensation strategies, respectively, are also important.