Management and Organizational Studies 3342A/B Chapter Notes - Chapter 7: Level Set, Marginal Product, Marginal Revenue

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3342A/B
• Professor: Jody Merritt

Document Summary

Compensation strategy: external competitiveness: refers the pay relationships among organizations an organizations pay relative to its competitors. Labour market factors: economic theory of labours markets begins with four basic assumptions, employers always seek to maximize profits, people are homogeneous and therefore are interchangeable. Modification to the supply side: reservation wage theory. Improving productive capabilities will increase pay under this model. Product market factors: the supply and demand for labour are major determinants of an employer"s pay level, the organization must always however, earn enough revenue to make the pay level worth it, product demand. Organizational factors: industry and technology, the industry in which an organization competes influences the technologies used. If a company has a lag the market pricing strategy, they won"t have a lead the market compensation strategy. Relevant markets: each organization operates in multiple labour markets (each with their own demand and supply, there are three factors used to determine the relevant labour market, occupation (skill, knowledge required)