The number one reason why employees leave companies is because they think they are underpaid. When employees know without a shadow of doubt that they are being paid fairly, they are more likely to stick around. Having an adequate salary policy can support long term business growth and improved employee retention rates. (Payscale)
Fair pay is not important to just employees; paying employees fairly is also in a company’s best interest. (Rasch, Szypko)
Organizations with a more engaged workforce outperform their peers on a number of organizational performance metrics (Salonova, Agut, and Piero 2005; Harter, Schmidt, and Hayes 2002). (Rasch, Szypko,)
Organizations may also save money through reduced work stress, which leads to improved psychological and physical health, which means fewer absences and better focus (Spector, Dwyer, and Jex 1988; Spector and Jex 1991; Wright and Cropanzano 1998). (Rasch, Szypko) Turnover intentions may also be reduced, and the hefty cost of replacing an employee may be avoided by paying employees fairly (Fitz-enz 1997) (Rasch, Szypko)
The Equity Theory suggests that an employee must regard his or her own ratio of merit incr...
... middle of paper ...
...e grade are treated alike for pay purposes. Any increases to an employees’ salary would be determined by the performance evaluation and be rewarded with an incentive or bonus pay. (Reference for Business)
Reference for Business staff, web. Employee Compensation, http://www.referenceforbusiness.com/management/Em-Exp/Employee-Compensation.html >accessed 11 Sept. 2016.
Rasch, Rena, Szypko, Mark, World at Work Journal web. Perception is Reality,https://hr-vendor-directory.worldatwork.org/html/pub/PerceptionIsReality_Q4Journal.pdf >accessed 11 Sept. 2016.
Payscale staff, web. Compensation Today, http://www.payscale.com/compensation-today/2015/08/hr-video-the-great-salary-transparency-debate >accessed 11 Sept. 2016.
Martocchio, Joseph J. Strategic Compensation: A Human Resource Management Approach. 8th ed. New Jersey: Pearson, 2015. Print.
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