Final answer:
In developing a compensation plan, the two basic decisions to be made are the method of payment and job responsibilities, with factors like employee insurance and performance evaluation criteria playing significant roles in determining compensation. So the correct answer is option 2,3.
Step-by-step explanation:
The two basic decisions to be made in developing a compensation plan are the method of payment and job responsibilities. The method of payment often includes salary, wages, and supplemental pay, while consideration of job responsibilities can include assessing the complexity and expectations of the role, which may influence the overall compensation.
Additionally, compensation encompasses various elements such as employee insurance, retirement plans, and other legally required benefits. Organizations must also consider growth and development opportunities, career advancement, professional relations, supervision and feedback, as well as factors like time pressure and extra work requirements.
It is essential to ensure that employees are rewarded fairly for their effort and the costs they incur as part of their work activity. Factors influencing compensation include experience, education, skill, talent, and union membership. Performance evaluation criteria often play a critical role in determining individual compensation and incentives, potentially adopting piece-rate systems or other incentive payment plans to reward effectiveness and efficiency.