---
date: '2024-01-10'
description: compensation fundamentals including total rewards, internal alignment, external competitiveness, employee contributions, and strategic pay policies.
id: Pay model
modified: 2026-06-05 15:08:38 GMT-04:00
tags:
  - commerce4be3
title: Pay model
created: '2024-01-10'
published: '2024-01-10'
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permalink: https://aarnphm.xyz/thoughts/university/twenty-three-twenty-four/commerce-4be3/Pay-model.md
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see also: [[thoughts/university/twenty-three-twenty-four/commerce-4be3/The Pay Model.pdf|Slides]]

## compensation.

> refer to all forms of financial returns and tangible services and benefits receive as part of an employment relationship

1. societal
   - pay and benefits as measure of justice
   - job losses or gains in a country is a function of labor costs
2. stockholders

- ESA: employment options plan and stock purchase plan, ISO
- executive pays: VPs, higher up.
- performance measures

3. managers

- major expense that must be managed
- major determinant of employee attitudes and behaviours

4. employees

- financial freedom
- exchange of good
- incentive to work a job, and have a reward for having done so.

Merit payment:

> Total Rewards:

RRSP: 401k

Health spending account:

employment security: union membership

> Social capital

Employee value proposition

Psychological safety: without having retaliation and being safe at work environment.

## total reward.

### total compensation

- include cash payments (IA, CPP)

Cash compensation:

- Base pay: Job evaluation
- merit increases are increments
- COLA (cost of living adjustment)
- incentives (bonuses)

Benefits

- health insurance
- pension: retirement and saving
- allowances

### relational returns

> Non-financial returns that substantially impact employee behaviour, such as employment security and learning and developmental opportunities

- psychological returns
- recognition and status

## pay model.

```mermaid
graph LR

SP{{Strategic polcies}} --> T{{Techniques}} --> SO{{Strategic objectives}}
```

collective bargaining

- objectives
- policies that form the foundation of compensation
- techniques that make up compensation system.

### internal alignment

- comparisons among jobs and skill levels within organization
- pertains pay rates both for employees
- Pay relationship affect compensations objectives

### external competitiveness

- pay comparisons with competitors externally
- **market driven**
- objectives:
  - ensure pay is sufficient to attract
  - control labor cost to ensure competitive pricing of product.

### employee contributions

- how employees are rewarded
- bases for performance-based evaluations, perceive pay as fair.

### management

- right people get the right pay for achieving the right objectives the right way.

## pay techniques

- four basic policies
- tools and mechanism that are used to achieve objectives.

Gender inequality [article](https://web.archive.org/web/20230602214140/https://www.theglobeandmail.com/business/careers/article-not-a-single-large-public-canadian-firm-has-closed-the-gender-pay-gap/)