Pay-Structure Decisions
{"Image DocumentName": "Pay-Structure Decisions", "Image ImageDescription": "Hierarchical pay structures. big differences from one pay level to another. work best for independent work. Compressed pay structures. fewer pay levels with smaller differences in pay between pay levels. work best for interdependent work. Pay-structure decisions are concerned with internal pay distributions, meaning the extent to which people in the company receive very different levels of pay. With hierarchical pay structures, there are big differences from one pay level to another. The largest pay levels are for people near the top of the pay distribution. The basic idea behind hierarchical pay structures is that large differences in pay between jobs or organizational levels should motivate people to work harder to obtain those higher paying jobs. By contrast, with compressed pay structures, there are typically fewer pay levels and smaller differences in pay between pay levels. Pay is less dispersed and more similar across jobs in the company. The basic idea behind compressed pay structures is that similar pay levels should lead to higher levels of cooperation, feelings of fairness and a common purpose, and better group and team performance. For now, the key seems to be that hierarchical pay structures work best for independent work, where it s easy to determine the contributions of individual performers and where little coordination with others is needed to get the job done. In other words, hierarchical pay structures work best when clear links can be drawn between individual performance and individual rewards. By contrast, compressed pay structures, that is, paying everyone similar amounts of money, seem to work best for interdependent work, in which employees must work with each other. But some companies are pursuing a middle ground, in which they try to balance hierarchical and compressed pay structures by giving ordinary workers the chance to earn more through ESOPs, stock options, and profit sharing. 6.1.", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}