Question:
The company's policy ensures every employee gets fair wages based on their role and market standards. What is the likely long term effect of following this principle?
The company's policy ensures every employee gets fair wages based on their role and market standards. What is the likely long term effect of following this principle?
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Remember: Fair Pay = Happy Employees. Happy Employees = Loyal Employees who stay long-term.
Updated On: Jun 25, 2026
- Increased turnover
- Reduced morale
- Increased employee loyalty
- Centralization of power
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The Correct Option is C
Solution and Explanation
Step 1: Concept
This scenario reflects Henri Fayol's Principle of Remuneration of Personnel, which states that wages should be fair, reasonable, and satisfactory to both employees and the organization.
Step 2: Meaning
Fair compensation directly impacts the psychological contract between the employer and the employee, influencing their long-term behavior and commitment.
Step 3: Analysis
• Increased turnover (employees leaving) is a result of unfair or low wages, not fair wages.
• Reduced morale is a negative outcome that occurs when employees feel undervalued.
• Centralization of power relates to decision-making authority, not compensation.
• Increased employee loyalty is the natural long-term result of treating employees fairly and paying them well. When workers feel financially secure and valued, they stay with the company.
Step 4: Conclusion
Following the principle of fair remuneration leads to a stable, dedicated, and loyal workforce.
Final Answer: (C)
This scenario reflects Henri Fayol's Principle of Remuneration of Personnel, which states that wages should be fair, reasonable, and satisfactory to both employees and the organization.
Step 2: Meaning
Fair compensation directly impacts the psychological contract between the employer and the employee, influencing their long-term behavior and commitment.
Step 3: Analysis
• Increased turnover (employees leaving) is a result of unfair or low wages, not fair wages.
• Reduced morale is a negative outcome that occurs when employees feel undervalued.
• Centralization of power relates to decision-making authority, not compensation.
• Increased employee loyalty is the natural long-term result of treating employees fairly and paying them well. When workers feel financially secure and valued, they stay with the company.
Step 4: Conclusion
Following the principle of fair remuneration leads to a stable, dedicated, and loyal workforce.
Final Answer: (C)
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