What three functions are salaries meant to perform?

Question

What are the three primary functions that salaries are meant to perform? I appreciate a prompt response. Thank you.

Adeline Goyette · Accepted Answer

Salaries should attract capable employees, motivate employees to improve performance, and retain capable employees.

One of the major problems facing most employers in both the public and private sectors is how to motivate their employees in order to improve performance. Economics is largely based on the assumption that monetary incentives improve performance. It is generally believed that the effect of monetary incentives is unambiguously positive; a large monetary incentive improves employee performance.

Compensation management is one of the most important elements of personnel management. It includes economic rewards in the form of wages and salaries, as well as in different forms of non-wage economic payment known as fringe benefits, indirect compensation, or supplementary pay.

The subject of compensation, and for that matter indirect compensation, is of great importance because it affects the well-being of individuals in the concerned organizations.

Refer to the following research papers, which aim to ascertain the relationship between monetary incentives and their impact on employee performance:

The Impact of Indirect Compensation on Employee Performance: An Overview by Mashal Ahmed & Abu Bakar Ahmed

Monetary Incentives Motivate Employees on Organizational Performance by Igbaekemem Goddy Osa

Madie Hilpert

What three functions are salaries meant to perform?

1 Answers

The Impact of Indirect Compensation on Employee Performance: An Overview by Mashal Ahmed & Abu Bakar Ahmed

Monetary Incentives Motivate Employees on Organizational Performance by Igbaekemem Goddy Osa

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