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Compensation Goals
Compensation is a complex subject, partly because organizations wish it to do so many things. First, organizations and
their employees want a process that creates rewards that are seen as fair and equitable. They also want a process that is
competitive, so that employees are content to stay with the organization. In addition, new focuses are on making employees
more productive as well as being sure that all this is done legally. As in most circumstances where there are many goals,
the actions that take place may be congruent with some goals and in conflict with others. In practice, compensation administration
is at best a compromise of the various goals it seeks to serve.
Which goals are pursued actively are partly a function of organizational values. But they are also a function of the focus
that society has currently placed on these goals. John Gardner, in his book Excellence: Can We Be Equal and Excellent Too?,
points out the tension in our society between equality and competitive performance.1 In a way, compensation administration
is caught on the horns of this dilemma, and the approach and focus of the various editions of this text reflect something
of the shift back and forth that Gardner claims is inevitable and healthy in our society. The last edition of this text was
published in 1974. Through the 1960s and into the 1970s there was a deep concern with equality in our nation. Legislation
such as the Equal Pay Act and the Civil Rights Act that directly affect compensation administration is a legacy of this era.
At the end of the 1970s, organizations became very concerned with keeping up with the market as inflation rates went into
double digits for one of the few times in our history. The 1974 edition of this text reflected that concern, with an outline
that focused on equity. During the 1980s and 1990s, competitive pressures took center stage and compensation planning became
global and market focused. In the U.S. and other countries, benefits became ever more complex with the shift to local (state)
controls and laws.
Today, while preserving most of the progress made toward equality, organizations are much more concerned with productivity.
This is a reaction to increased competition from foreign countries, which makes us much more conscious of the higher wage
rates paid to American workers and the need to obtain the most from employees to counterbalance this foreign advantage. One
of the areas being focused on to increase our productivity is the way employees are compensated. At the same time, cost control
is still an issue (and will always be an issue) as it relates to compensation. Many organizations have only limited practical
control over inventory, capital and other expenditures. What can always be controlled and managed is "pay." Motivation,
the information highway, modern cost control, state’s unique HR laws - all combine to create a new age and a new
need for understanding the basics of compensation and benefits.
This present 2000-2004 edition reflects these concerns. We are also pleased to include two new chapters: Chapter 23 on
branch offices and Chapter 24 on online administration of compensation programs.
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