There are consequences of pay level and pay mix decisions. Identify and briefly discuss each factor. (Labor Market Factors, Product Market Factors, Organizaiton Factors). What pay level does the efficiency wage predict? What pay level does the fairness wage predict? Does the theory accurately predict organization behavior? Why or why not?
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The consequence of pay level and pay mix decisions is affected by labor market factors. If there is strong competition for top talent and the pay level is below average and the pay mix is unattractive, the company will lose employees. Similarly, if the product market is intensely competitive and there is price completion the pressure to reduce costs is very high. Such pressures bring down the pay level to below market level and adversely affect pay mix decisions. The organization factors include the production method used by the company. If the Job Shop method is followed then highly skilled workers ...
Pay level and pay mix decisions are explained in a structured manner in this response. The answer includes references used.