ADMS 3490 Chapter Notes - Chapter 1: Operating Expense, Total Rewards, Reward System

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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. 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. 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.

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