HRM303 Chapter Notes - Chapter 1: Performance Appraisal, Common Hardware Reference Platform, Reward System

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Chapter 1: a roadmap to effective compensation
Purpose of a compensation system: to help create a willingness among qualified
persons to join the organization and to perform the tasks needed by the
organization
Extrinsic vs. intrinsic rewards
Reward: anything provided by the job or the organization that satisfies an
employee need
Extrinsic rewards: factors that satisfy basic human needs for survival and security,
as well as social needs and needs for recognition
Intrinsic rewards: factors that satisfy higher order human needs for self-esteem,
achievement, growth and development
Rewards vs. incentives
Rewards are the positive consequences of performing behaviours desired by
the organization
Incetives used to induce employees to perform behaviours they might not
otherwise would
Incentives are used to induce valued behaviour while rewards serve to
recognize valued behaviour
Incentive: promise that a specified reward will be provided if specified employee
behaviour is performed
Reward vs. compensation strategy
Reward system: mix of intrinsic and extrinsic rewards that an organization
provides to its members
Compensation system: economic or monetary part of the reward system
Total rewards: compensation philosophy that considers the entire spectrum of
rewards that an organization may offer to employees
Becoming increasingly popular in Canada
Reward strategy: plan for the mix of rewards to be provided to members, along
with the means through which they will be provided
Compensation strategy is one part of the reward strategy with three main
components
Base pay, performance pay and indirect pay
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