HRM 3490 Chapter 4: Components of Compensation

• School: York University
• Department: Human Resources Management
• Course: HRM 3490
• Professor: Parbudyal Singh

Document Summary

Base pay: job evaluation, market pricing, pay for knowledge. Insurance: pay for time not worked, employee services, other benefits. Why use base pay: easy to measure, easy to price in terms of its value to the employer, easy to attribute to individual employees, controllable by the individual employee, relatively stable. Advantages: signal key behaviour and motivate employees, can reduce the need for other types of mechanisms for controlling employee behaviour, set performance standards, support specific managerial strategies, make pay more variable. Disadvantages: employees prefer predictable, may require higher compensation, may cause focus only on rewarded behaviours, may cause unanticipated consequences, usually more complex than base pay. Performance pay: any type of financial reward provided only when certain specified performance results occur, these results may be based on the performance of individual employees, a group or team of employees, or the entire organization.