Findings: compensation influence employee behavior:

 Higher productivity: When high-performing employees understand the connection between

their individual contributions and their pay potential, motivation is created to deliver above-
average results.
 Budget effectiveness. By differentiating salary increases based on individual performance,
companies can ensure that their merit budgets generate the greatest ROI.

Pay is market driven.

Findings:

Market-based ranges continue to be the most prevalent type of salary structure used by organizations
today

Reference:

Harris, Stacey and Jones, Katherine. Getting Compensation Right: The Value of Compensation Analysis
and Planning Tools. Bersin & Associates. April 2011

Conclusion:

I fully agree with the market-driven wage. I believe the market should determine the level of employee
compensation. An employer is interested in hiring an employee at the lowest possible cost. Conversely,
the employee is interested in obtaining employment at the highest possible wage. This conflict results in
an equilibrium wage being paid to employees by employers. Basically, the scales would balance.

Consider the manager of a fast-food restaurant. In the absence of a minimum wage policy established by
the government, the manager could offer workers any amount he or she sees fit. Let's assume the
manager offers $4.00 per hour to workers in a market where the average hourly wage was $5.00 …