This chapter will focus on the strategic design choices that are involved in managing a reward system,and their relationship to organiztional effectiveness,rather than on specific pay-system technologies. The details of pay-system design and management have been described in numerous books ( e.g., Henderson 1979; Patten 1977; and Ellig 1982 ). The underying assumption in this chapter is that a properly designed reward system can be a key contributor to organizational effectiveness. But careful analysis is required of the role reward systems should play in the strategic plan of the organization.