, Volume 52, Issue 2, pp 149-152

The Ethics of Compensation Systems

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Abstract

Compensation systems are an integral part of the relationships organizations establish with their employees. For many years, researchers viewed pay systems as an efficient way to bring market-like labour exchanges inside organizations. This view suggested that only economic considerations matter for understanding how compensation systems effect organizations and their employees. Advances in organizational research, particularly those focused on issues of justice and fairness, suggest that the fully understanding the outcomes of compensation systems requires examining their psychological, social, and moral effects.