Chapter 60 Introduction to Employee Compensation & Reward Systems
Employee reward systems refer to the constellation of monetary and nonmonetary rewards that an organization offers, which includes direct pay (e.g., base pay, variable pay), indirect pay (e.g., benefits), and other returns (e.g., nonmonetary awards). With respect to direct pay, organizations have an opportunity to ensure that jobs are paid equitably within the organization as well as in relation to other organizations; these processes are referred to as internal equity (i.e., internal alignment and external equity (i.e., external competitiveness. Further, organizations should ensure that individuals within an organization are paid fairly, which can be described as individual equity.