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wage-effort bargain. Many of the approach to compensation are designed to alter worker behaviour through a system of rewards and penalties. Workers can be compensated based on hourly work, piecework, or be salaried employees. Different job evaluation systems help employers determine the relative worth of jobs to establish which should be paid more than others. Competency-based pay compensates employees for the different skills or increased knowledge they possess rather than for the job they hold in a designated job category. Incentive-based compensation is intended to maximize the return that employers yield from money spent on compensation. The expectations of employers is that setting a measure of performance and tying a reward to it will increase the effort that workers put into their job or that task.2. How do employees judge whether compensation is fair?For most employees, pay has a direct bearing not only on their standard of living but also on the status and recognition they may be able to achieve both on and off the job. It is essential that the pay be equitable in terms of the contributions made by the employee. It is also essential that an employee’s pay be equitable in terms of what other employees are receiving for their contributions. For employees, equity is achieved when their perceived input/output ratio equals the input/output ratio of referent others (those to whom they compare themselves). Employee’s perception of equity, or inequity, can have dramatic effects on their motivation for both work behaviourand productivity. Perceptions of external pay equity exist when the organization is paying wages that are relatively equal to what other employers are paying for similar types of work. Expectancy theory holds that employees should exert greater work effort if they have reason to expect that it will result in a reward that is valued. Employees must also believe that good performance is valued by their employer and will result in their receiving the expected reward. 3. Is it fair to say that compensation structures disadvantage women? Explain.Women typically earn less than men, even controlling for occupational and personal characteristics. A less obvious form of discrimination (and a contributor to pay inequity) is women’s traditionally greater effort around child and elder care. These issues are sometimes addressed in discussion about “family friendly” employer benefits that are aimed at managing the stress generated by such caregiving demands. Because an increasing proportion of women work outside the home, families have fewer resources to manage the tasks of social reproduction. This increase in female employment reflects two things: increasing interest and opportunities for women to be employed, and the growing requirement of income from women’s employment. This latter requirement is fostered by stagnation and/or reduction in real household wages as well as changes in family structures. That is, one of the reasons workers have more stress is because employers have reduced the real-dollar value of the compensation they pay, and as a result, families can no longer make ends meet on one income.