Base Pay Linkage

Base Pay Linkage

Base pay component

Base pay is the largest component of the total compensation package for most employees (exceptions being direct sales personnel and top executives in organizations that utilize variable pay and equity plans heavily). Wages/salaries represent the largest cost item for many organizations and failing to manage them effectively is a sure ticket to poor organizational performance (McElhaney & Marion 1995). It is therefore critical that base pay rates are viewed by both the organization and by employees as being:

Internally equitable

Externally competitive

Affordable/cost effective

Legal/defensible

Understandable

Appropriate for the organization

Appropriate for the workforce

The literature in the compensation field seems to be ...