Which of the following is NOT one of the factors that influence the design of any pay plan?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → The unemployment rate
Option (1) The unemployment rate — Not a factor in the design of a pay plan. The unemployment rate is a labour market condition. It affects how recruitment, selection and training are carried out.
Option (2) Legal factors such as labour laws — A factor in the design of a pay plan. Labour laws set rules on pay that a plan must follow.
Option (3) The union — A factor in the design of a pay plan. The union bargains for its members, so the plan must weigh its demands.
Option (4) Company policy — A factor in the design of a pay plan. The firm’s own policy on pay shapes the plan.
NCERT (2026-27 Edition): “(viii) Compensation … Besides there are some other factors also which influence the design of any pay plan, like legal (labour laws), union, company policy and equity. Thus, we see that as a process, staffing includes acquisition, retention, development, performance appraisal, promotion and compensation of the most important resource of an organisation, that is, its human capital. It needs to be kept in mind that several factors such as supply and demand of specific skills in the labour market, unemployment rate, labour market conditions, legal and political considerations, company’s image, policy, human resource planning cost, technological developments and general economic environment etc., will influence the way recruitment, selection and training will be actually carried out.” |