HRM 2200 Study Guide - Midterm Guide: Virtuous Circle And Vicious Circle, Equal Pay For Equal Work, Westjet
Document Summary
Chapter 1 - the pay model: roles of various stakeholders in the compensation system (society, stockholders, managers, Society sees pay as a measure of justice. There are laws, rules, and regulations such as pay equity legislation, aimed to eliminate the gap between males and females" earnings differentials. Benefits are also seen as a reflection of equality and justice. Some stakeholders believe that using stock options to pay their employees will increase effort and productivity because there will be a sense of ownership when it comes to the company (westjet). Others, however, argue that granting employees too much ownership will take away from the wealth of the stakeholders. Moreover, it can actually direct employees" behaviour into the opposite direction and not as intended originally. They believe that compensation should be directly tied to performance. However, it is unclear if the company"s performance and executive pay are linked together. Managers believe that the compensation influences their success in two ways.
