The basic goals of a compensation system are to attract, motivate and retain employees. A compensation system of an organization must also be compliant with pay laws and be cost effective. It needs to be a system that can be administered simply. An effective compensation system includes a balance between internal equity and external competitiveness. Equity is a primary goal of a successful compensation system. It can be defined in the following three ways:
Workplace equity refers to the perception that all employees in an organization are being treated fairly.
External pay ...
Discusses the general goals of an organization's compensation system.