ABSTRACT
Organizations use financial and non-financial compensation to attract the quality and quantity of employees they need, retain them, and motivate them to achieve organizational goals. Therefore, fair and market-related financial compensation is crucial to the organization’s ability to recruit, retain, and motivate employees. An effective compensation system should be adequate (as outlined in legislation and in line with market salaries), equitable (based on the value of a job relative to other jobs in the organization), incentive-providing (by making use of merit and raises), secure (adequate to satisfy the employee's basic needs), balanced (including pay, benefits, and promotions), cost-effective for the organization and acceptable to the employee. The most important factors that influence the salary of an employee include the job content (as measured by job evaluation), the market value of the job and individual expertise. The market value of a job refers to the average wage or salary paid in a country, area, or industry. The individual’s pay level is determined by expertise, that is, the qualifications and experience of the job incumbent.
