The cost of labor (i.e., salaries, benefits and incentives) accounts for a sizeable portion of an employer’s operating expenses. Pay packages priced too low or configured improperly can deprive firms of the talent needed to successfully develop, market and produce viable products and services in today’s ultra competitive business environment. However, if pay packages are too high, labor costs can weaken a firm’s ability to compete. For example, a firm with 500 employees can have labor costs that easily exceed $15 million. Thus, building and maintaining a cost-efficient pay system that encourages employee performance without adversely affecting corporate earnings requires constant vigilance.
Scott, K. Dow; Morajda, Dennis; and Bishop, James W.. Increasing Company Competitiveness: “Tuning-Up” Your Pay System. WorldatWork Journal, 11, 1: 35-42, 2002. Retrieved from Loyola eCommons, School of Business: Faculty Publications and Other Works,
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