Textbook Notes (369,051)
Canada (162,364)
York University (12,903)
ADMS 3490 (33)
Ping Peng (1)
Chapter 1

HRM 3490-Chapter 1.docx

3 Pages
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Department
Administrative Studies
Course Code
ADMS 3490
Professor
Ping Peng

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*HRM 3490 Chapter 1: A Road Map to Effective Compensation  Canadian firms typically spend 40-70% of their operating budgets to compensate their employees.  Compensation is the single largest operating expenditure.  A compensation system is one of the most powerful tools available to an employer for shaping employee behavior and influencing company performance.  Many organizations waste this potential, b/c they see it as a cost needed to be minimized.  Some firms not only waste this potential, but promote unproductive or even counterproductive behavior. Role and Purpose of the Compensation System  Purpose of a compensation system- to help create willingness among qualified persons to join the organization and to perform the tasks needed by the organization.  Employees must perceive that accepting a job with an employer will help satisfy own needs as well as needs for security, social interaction, status, achievement etc. Extrinsic vs. Intrinsic Rewards  Reward- Anything provided by the organization that satisfies one or more of an employee’s needs.  A reward can be divided into two main categories: Extrinsic rewards and intrinsic rewards.  Extrinsic Rewards- satisfy basic needs for survival and security, as well as social needs and needs for recognition. - They derive from factors that surround the job such as pay, supervisory behavior, co-workers, and general working conditions.  Intrinsic Rewards- satisfy higher-level needs for self-esteem, achievement, growth and development. - They derive from natural factors in the work itself such as the amount of challenge/interest the job provides, the degree of variety in the job and the extent to which it provides feedback and allows autonomy. Rewards vs. Incentives  Rewards are the positive consequences of performing behaviors desired by the organization.  Employees receive these rewards either subsequent to performing the behavior or during performance of the behavior.  Incentive- is a promise that a specified reward will be provided if the employee performs a specified behavior. - Offered to induce employees to perform behaviors that thy might otherwise perform, or to perform these behaviors at a higher level.  Incentives are intended to induce valued behavior, while rewards serve to recognize valued behavior. Reward vs. Compensation Strategy  Reward System- The mix of intrinsic and extrinsic rewards provided to its members by an organization. - If utilized effectively, each can produce important benefits for the organization.  Total Rewards- The compensation philosophy that considers the entire spectrum of rewards that an organization may offer to employees.  Reward Strategy- The plan for the mix of rewards, both extrinsic and intrinsic that the organization intends to provide to its members along with the means
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