Can you name 20 influences on pay that could cause a difference in earnings between two ostensibly equal employees? This short, involving exercise can be used to illustrate the numerous influences that affect how employees' pay is determined, for example, education, experience required for the job, supply and demand, company size, seniority, and merit. It identifies and clarifies three major categories of influences—internal consistency, external competitiveness, and individual contribution—that affect pay decisions and pay policies. The exercise stimulates students' thinking about pay issues and sets the stage for a discussion of effective compensation decisions.
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Rynes, S.Gerhart, B., & Minette, K. (2004). Importance of pay in employee motivation: Discrepancies between what they say and what they do. Human Resource Management , 43(4), 381-394.
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