4.5 individual Pay Rate Determinati

4.5 individual Pay Rate DeterminationThe third major decision in designing a compensation system is the individual wage decision. This decision concerns the relative pay of individuals who perform similar jobs in the same company. If workers perform similar jobs and their performance and experience are equal, it is reasonable to pay them all the same. But if some are more productive or have more experience and training then they should receive more money.The individual wage decision influences feelings of job satisfaction and pay equity. Intense feelings of inequity can be created by unfavorable comparisons between Co-workers regarding their pay Higher-producing employees think they should receive higher pay than co-workers who produce less. Individuals who work together usually know how much each s paid, and they compare their performances.PerformancePerformance differences are clearly the most reasonable and well-accepted justification for paying differential amounts. Most individuals accept the principle that workers who produce more should receive higher pay. This pay-for-performance principle is particularly strong among individuals who accept the work ethic. Studies have shown that individuals who score high on the Protestant work ethic scale tend to think high performers ought to be highly rewarded to establish a condition of equity. On the other hand, individuals with low. Protestant work ethic scores tend to believe that the rewards should be distributed equally to both high and low performers. 4 Outstanding employees generally feel very demoralize when they are paid the same as less productive workers.