Explain the basic compensation objectives of pay systems.

What will be an ideal response?

The basic objectives include efficiency, fairness, ethics, and compliance with laws and regulations. 

•Efficiency can be stated more specifically: (1) improving performance, increasing 
quality, delighting customers and stockholders, and (2) controlling labor costs. 
•The fairness objective calls for fair treatment for all employees by recognizing both 
employee contributions (e.g., higher pay for greater performance, experience, or training) and employee needs (e.g., a fair wage as well as fair procedures). 
•Ethics means the organization cares about how its results are achieved. Because it is so 
important, it is inevitable that managing pay sometimes creates ethical dilemmas. 
•Compliance as a pay objective means conforming to federal and state compensation 
laws and regulations. If laws change, pay systems may need to change, too, to ensure continued compliance. As companies go global, they must comply with the laws of all the countries in which they operate.

Business

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