The simple act of receiving a paycheck for one’s job is the result of many complex processes involved in the art and science of compensation. Compensation systems are designed to comply with a large number of organizational objectives including serving as an exchange for hourly labor, motivating behavior, accomplishing social objectives such as covering the cost of medical insurance, and meeting a variety of government and legal requirements. The design of compensation systems and methods for distributing pay and benefits are influenced by cultural traditions and legal requirements.

Within the organizational sciences, compensation has traditionally encompassed base pay, pay raises, pay systems, benefits, the psychology of pay, and legal issues. Recently, the area of compensation has expanded to include nontraditional conceptions of pay that are often ...

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