Almost every worker receives a paycheck at some regular interval. The amounts of these paychecks vary enormously, from the minimum wage to the salary of the chief executive of a major corporation. Why do they earn the particular amount of each paycheck? If we asked the recipients, we might get answers like these:
I worked all week.
My job is very important.
I did a good job on that project.
I’m paid what I’m worth!
This is the market rate for my job.
This job is boring and the work conditions are terrible!
These answers are almost as diverse as the amounts on the paychecks.
People are paid for the work they do. They are also paid for their performance, their skills, their seniority, and a host of other factors. Their pay is influenced by the market value of labor, by unions, by social attitudes, and by other factors. The way the organization they work for sets pay rates also influences the size of the paycheck. In other words, compensating people is a complex task requiring many decisions. This textbook is about this daily multitude of decisions and the influences on them both inside and outside the organization. Of note are new outside influences that create new responses such as: I get what the city determines to be a living wage.
Pay & Work
In short, this text is about pay…how it is determined and managed. But pay, like a coin, has two sides: it represents income to employees and cost to the employer. What the employer provides the employee is called a wage or a salary. Often, the term compensation is used to indicate the various forms of pay money, benefits, non-financial rewards. What the employee provides the employer is labor service, usually called work. This labor service consists of many different kinds of employee behavior, for example: showing up regularly and on time, carrying out tasks dependably, cooperating with others, making useful suggestions. So pay or compensation represents an exchange between the employee and organization. Each gives something in return for something else. In the past, the communication equation has been neutral. Employees knew as much about competitive compensation as their employers knew about their performances.
