HRM 3490 Lecture Notes - Lecture 4: Piece Work, Fixed Cost, Nepotism

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Base pay: portion of an individuals compensation that is based on time worked, not output produced or results achieved. Most canadians base pay is largest component of compensation package. Guaranteed by employer: works for certain time, paid pre-specified amount of money. Hourly basis: wage; weekly, monthly, annual basis: salary. Output related pay cannot always be used, can only be used when (1)easy to measure (2)easy to price in terms of value to employer (3)easy to attribute to ind employees (4)controllable by ind emp (5)relatively stable. Sometimes output not desirable because of unintended consequences can lead to high push for production at expense of safety. Only focus on the measured behaviors and neglect the other behaviors. People prefer certainty in their rewards and thus prefer a large component of base pay in their compensation package. Necessary because of the general preference among employees for base pay induce employees to accept jobs: can result in higher total compensation costs.

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