Nature of Compensation
Compensation is an important factor affecting how and why people choose to work at one organization over others. Employers must be reasonably competitive with several types of compensation to attract and retain competent employees.
Types of Compensation
Rewards can be both intrinsic and extrinsic. Intrinsic rewards often include praise for completing a project or meeting performance objectives. Other psychological and social effects of compensation reflect the intrinsic type of rewards. Extrinsic rewards are tangible and take both monetary and nonmonetary forms. Tangible components of a compensation program are of two general types (see Figure 12-1) With direct compensation, the employer exchanges