MGMT 3420 Chapter Notes - Chapter 1-12: Comparator, Job Enrichment, Measuring Instrument
18 Apr 2018
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Chapter 1: a road map to effective compensation. While well-thought out pay systems can have positive implications for organizations, employees and society, the consequences of poorly designed compensation systems can also have undesirable consequences. Reward systems can have powerful effects on behaviour but that behaviour we receive is not always the behaviour we want. There is no one best compensation system that fits all firms. For every successful practice, there is a complete flop. Understanding why the same compensation system that is successful in one firm fails at another is an essential precondition to successful compensation design. Canadian firms typically spend 40-70% of their operating budgets to compensate their employees: for many, compensation is the single largest operating expenditure. A compensation system is one of the most powerful tools available to an employer for shaping employee behaviour and influencing company performance, yet many organizations waste this potential, viewing compensation as a cost to be minimized.
