After reading this chapter, you should be able to:

• Define and describe a reward system, its components, and its reason for existing.
• Explain the links between compensation, employee satisfaction, and motivation.
• Specify the differences between internal equity and external equity.
• Describe the strengths and weaknesses of the various job evaluation methods.
• Discuss the methods for establishing external equity.
• Describe the methods of establishing individual pay rates.
• Explain the legal regulation of compensation systems.
• Describe current issues associated with the administration of reward systems.
• Discuss the issues of comparable worth.