Organizations need to be fluid to move as markets move that necessitates a more flexible approach to compensation
Compensation systems in organizations must be linked to organizational objectives and strategies.But as the opening discussion illustrates, compensation also requires balancing the interests and costs of the employer with the expectations of employees. An effective compensation program in an organization addresses four objectives
1.Legal compliance with al appropriate laws and regulations
2.Cost effectiveness for the organization
3.Internal,external,and individual equity for employees
4.Performance enhancement for the organization
Employers must balance compensation costs at a level that both ensures organizational competitiveness and provides sufficient rewards to employees for their knowledge, skills, abilities, and performance accomplishments. In order to attract, retain, and reward employees, employers provide several types of compensation