Base pay is the largest component of the total compensation package for most employees (exceptions being direct sales personnel and top executives in organizations that utilize variable pay and equity plans heavily). Wages/salaries represent the largest cost item for many organizations and failing to manage them effectively is a sure ticket to poor organizational performance.
Base pay is the foundation for total compensation, since it establishes the standard of living for employees. It also serves as the primary indication of the value the organization places on the role an employee plays and on the contributions the employee makes. For this reason the subject elicits great emotion and is often the source of conflict between the employee and the organization
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