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48-539: LERA's constituencies are professionals in the areas of academic research and education, compensation and benefits , human resources, labor and employment law, labor and management resources, labor markets and economics, public policy, training and development, and union administration and organizing. The executive director of LERA is Emily Smith. Past presidents of LERA include John T. Dunlop , George Shultz , and Ray Marshall , all of whom went on to serve as U.S. Secretary of Labor. LERA encourages research into all areas of

96-657: A change in status or remuneration in an organisation (e.g., promotion to a higher-paid position) or other extrinsic motivators can encourage employees to perform better within their role. Research on the long-term effects of higher vertical pay dispersion in an organisation are commonly negative, and usually are associated with dysfunctional behaviour in employees, increased employee turnover, short-sightedness, reduced teamwork and lower intrinsic motivation. There are academic theories which help to explain why vertical pay dispersion exists within an organisation, and how it can have both positive and negative effects. Tournament theory

144-923: A combination of short-term incentives (STIs) and long-term incentives (LTIs) in their compensation packages. This approach helps ensure the organization's long-term sustainability by discouraging executives from prioritizing short-term gains at the expense of the company's future. A well-designed total compensation plan should prevent executives from engaging in harmful short-term behaviors. Why Implement Variable Pay? According to Bussin (2019), more and more companies are adopting incentive and bonus schemes to boost employee performance and align individual goals with organizational objectives. These schemes offer several key benefits: -       Improved Performance : Incentivizing employees can drive superior individual, team, and organizational results. -       Shareholder Alignment: Variable pay can align employee interests with those of shareholders, fostering

192-421: A more balanced approach that integrates both tournament incentives and equity theory. In public sector, equity values are critical. The article highlights that large pay gaps, as suggested by Tournament Theory, may be perceived as unfair by employees, leading to reduce trust and organizational commitment. Therefore, in public sector settings, there is a need to balance the motivating effects of pay differentials with

240-452: A more motivated and engaged workforce, ultimately leading to increased profitability and shareholder value. An example where this type of plan is prevalent is how the real estate industry compensates real estate agents. A common variable pay plan might be the sales person receives 50% of every dollar they bring in up to a level of revenue at which they then bump up to 85% for every dollar they bring in going forward. Typically, this type of plan

288-519: A sense of ownership . -       Cost Management: By tying part of compensation to performance, companies can better manage their overall salary costs. -       Recognition and Reward: Variable pay provides a tangible way to acknowledge and reward employees for their contributions. -       Strategic Alignment: Well-designed incentive schemes can help drive organizational strategy and achieve specific goals. By implementing variable pay, companies can create

336-422: A stake in the company by granting them shares. This aligns their interests with those of the shareholders, encouraging long-term commitment and fostering a sense of ownership. Employees benefit from the company’s success, as the value of their shares increases with the company's profitability, creating a powerful incentive for both individual and organizational success (Investopedia, 2024). Organizations should use

384-420: A topic of political, social and news media discussions. In particular, special attention is paid toward cases where the difference of an executive director of an organisation is seen to be disproportionately high, when compared to the rest of the workforce and the difference in pay is visible within the organisation. Whether an organisation is in the public sector or private sector, research shows people care about

432-455: A type of incentive that can typically expressed as a percentage of sales revenue, gross profit, or a fixed amount per unit sold. In a full commission or straight commission plan, employees earn their income solely through commission. This model is commonly used in sales-driven environments to incentivize high performance by directly tying compensation to revenue generation. Long-term Incentives (LTIs): The design of long-term incentives (LTIs)

480-579: A variety of labor relations topics, including law, workplace culture, labor history, the effect of economic dislocation and change on employer-employee relations, corporate governance, workplace sociology and leadership, and other issues. The target audience is academics and practitioners in labor and employment relations from both a managerial and worker perspective. Perspectives on Work also includes news articles and reports about LERA activities and professional development offerings, as well as book reviews. This news magazine or journal-related article

528-522: A wide range of benefits, these generally fall within the categories of: Reciprocity theory is an important theory underpinning benefits, as it builds a social norm whereby an employer provides a 'positive' benefit, which is warmly received. In return the employee is inclined to provide positive workplace behaviour, strong productivity, and strong organisational commitment which is the bond or attachment that an employee has towards their employer, and subsequent levels of involvement. Social exchange theory

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576-406: Is a fixed monetary (cash) reward. The basic element of guaranteed pay is base salary which is paid on an hourly, daily, weekly, bi-weekly, semi-monthly or monthly rate. Base salary is provided for doing the job the employee is hired to do. The size of the salary is determined mainly by 1) the prevailing market salary level paid by other employers for that job, and 2) the performance of the person in

624-402: Is a highly effective incentive system that encourages employees to work collaboratively by rewarding performance improvements. By focusing on participation and teamwork, gainsharing motivates individuals to contribute beyond their standard responsibilities, resulting in enhanced problem-solving, cost reduction, timely delivery, and higher-quality outcomes. This collective effort ultimately benefits

672-528: Is an open forum respecting all opinions and perspectives. The association supports fundamental worker and human rights in the workplace and supports rights of the employees, employers, and their organizations to organize. The organization was founded as the Industrial Relations Research Association, by labor economists in the post World War II era, who found a need to expand upon discussions taking place surrounding workplace issues. For

720-515: Is another relevant theory which suggests that employees weigh up the total benefits and costs of their relationship with the employer. If an employee feels the costs of their work or employment relationship outweighs the benefits received from their work, the employee will be more likely to choose to end the employment relationship, to pursue an employment relationship that provides greater regard for benefits and social exchange theory. The motivation for an employer to provide benefits can vary. While

768-406: Is based in economics, which assumes an individual is a rational economic actor who will aim to maximise their individual utility, with the prize as the main motivator for the performance. Tournament theory relates to vertical pay dispersion because it suggests organisations where executive directors have a much higher level of pay will motivate other high-performing employees to work toward achieving

816-406: Is based on an annual period of time requiring a "resetting" each year back to the starting point of 50%. Sometimes this type of plan is administered so the sales person never resets or falls down to a lower level. It also includes Performance Linked Incentive which is variable and may range from 130% to 0% as per performance of the individual as per his key result areas (KRA). Benefits consist of

864-449: Is based on the idea of “tournaments” or “competitions” in an organisation, where there are clear winners and losers. Tournament theory states individuals are best motivated to perform well when any prizes available to be won are based on winning or failing, rather than just a monetary value. Employees within an organisation will compete against one another to win higher-level positions, which are usually associated with higher pay. The theory

912-1301: Is classified as non-monetary (not wages or salaries). These rewards are typically funded fully or partially by the employer. Employee benefits refer to the extra advantages offered to employees in addition to their salary. These consist of packages provided by the employer to enhance the cash compensation. Benefits typically encompass health coverage, income protection, savings, and retirement programs, all of which offer security for employees and their families. Benefits, often referred to as indirect compensation, are provided to employees through various plans instead of cash payments. These are including health insurance, retirement or pension plans retirement benefits, vacation time, sick time or other paid time off, flexible work arrangements including remote, hybrid or windowed work, healthcare savings account (HSA), flexible spending account (FSA) for healthcare or dependent care costs, transit benefit account, training or continued education subsidies, childcare subsidies, work from home equipment reimbursement, employee recognition programs, meal reimbursement and etc. Compensation and benefits can be primarily categorized into two types: monetary (direct compensation) and non-monetary (indirect compensation). The key components are outlined below: Guaranteed pay

960-415: Is defined as the ‘differences in pay levels between individuals within (i.e., horizontal dispersion) and across (i.e., vertical dispersion) jobs or organisational levels. Vertical pay dispersion is specifically the difference in remuneration between the most senior employees of an organisation (e.g., Executive Directors of Chief Executive) and an average employee. Vertical pay dispersion has recently become

1008-453: Is supportive of them, and their ‘perceived organisational support’ will increase. This is important as perceived social or organisational support can be one of the most significant factors in building resilient employees and reducing unplanned turnover. Employees will also build a sense of emotional commitment towards their employment which will foster in them a willingness to perform highly. While an employer may establish benefits, it

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1056-618: Is the John T. Dunlop Scholar Award. Two Dunlop Scholar Awards are given each year. One goes to an academic who makes the best contribution to international and/or comparative labor and employment research. A second award recognizes an academic for research that addresses an industrial relations/employment problem of national significance in the United States . Other awards include: Compensation and benefits Compensation and benefits refer to remuneration to employees from employers. Which

1104-757: Is the payments or rewards provided to an individual for the work that has been completed. Compensation is the direct monetary payment received for work performed, commonly known as wages. This is the compensation that employees earn for their work or contributions to the organization. This term may also denote a structured method in which employees receive financial compensation and additional benefits in return for their labor and contributions. Compensation can be any form of monetary such as salary, hourly wages, overtime pay, sign-on bonus, merit bonus, retention bonus, commissions, incentive pay or performance-based compensation, restricted stock units (RSUs) and etc Benefits are any type of reward offered by an organization that

1152-568: Is to reward exceptional performance over periods that extend beyond a single year. Unlike STIs, which focus on past achievements, LTIs are forward-looking, encouraging sustained performance and aligning employees' goals with the long-term objectives of the organization. These schemes foster a culture of continuous improvement and commitment, helping drive ongoing growth and innovation. Examples of LTIs include share schemes. -       Share Schemes : Share schemes, such as stock options or Employee Stock Ownership Plans (ESOPs), offer employees

1200-433: Is worth considering the importance of demographics on benefit satisfaction. For example, a workforce with a significant number of parents may value a benefit package which is centred around supporting them and their children. However, those without children, may perceive these benefits as unfair, irrelevant, and a financial disadvantage as they cannot gain the same financial benefits as employees with children. Pay dispersion

1248-755: The Allied Social Science Associations the first week of January each year. In 2018, LERA held the LERA 70th Annual Meeting, in Baltimore, MD, at the Hilton Baltimore, June 14–17, 2018. Our LERA 71st Annual Meeting, June 13–16, 2019 will take place in Cleveland, Ohio at the Westin Cleveland Downtown. LERA offers a number of awards, recognitions and grants each year. Its most prestigious award

1296-581: The Employment Policy Research Network (EPRN). It originally consisted of about 100 researchers (economists; management, human resources, and labor relations researchers; attorneys, historians and sociologists) from 30 universities, including California-Berkeley , Columbia , Cornell , Illinois, Massachusetts (several campuses), MIT , Michigan, Michigan State , Northeastern , Rutgers , Stanford and UCLA , as well as universities in Canada and

1344-766: The MIT Workplace Center and the Institute for Work and Employment Research. EPRN is an employment research repository and virtual collaboration space whose mission is to replace ideology and partisan rhetoric with facts and objective, evidence-based research in discussions of U.S. employment, work and labor. EPRN's goal is to provide the data, research, policy proposals and reasoning to improve national and state employment laws, policies and practices. Ultimately, EPRN realizing its mission means to contribute to healthier and more productive lives of American workers and their families, to promote general economic prosperity and to enable

1392-506: The School of Labor and Employment Relations in 2006, with LERA past President Joel Cutcher-Gershenfeld as its first dean. LERA itself changed its own name to the Labor and Employment Relations Association in 2005, in response to many changes taking place in the field, transitioning from industrial relations to the field of labor and employment relations. At the 2011 January annual meeting, LERA launched

1440-633: The United Kingdom. In March, 2011, the first cohort of doctoral students from MIT and Cornell joined EPRN as graduate student researchers who are sponsored by EPRN researchers. As of May 1, 2011, there were 125 EPRN researchers from 50 universities. EPRN received start-up funding from the Rockefeller Foundation and Russell Sage Foundation . The EPRN principal investigator is Thomas A. Kochan , George Maverick Bunker Professor of Management at MIT's Sloan School of Management and co-director of both

1488-783: The biannual journal, Perspectives on Work . The LERA Labor and Employment Law Section publishes a quarterly electronic newsletter as well. LERA organizational members include unions, management schools, universities, academic schools and departments, law firms and institutes. Individual members come from the ranks of academe, labor, management and neutrals. The organization provides professional development for human resource professionals, union members, corporate and non-profit managers; national, state and local government employees; arbitrators and mediators; labor attorneys and others. LERA meets each year in May/June (LERA Annual Meeting), and participates with 18 sessions (LERA@ASSA Meeting) as part of

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1536-434: The company’s overall performance. Effective profit-sharing plans require careful design, considering factors such as company size, employee participation, and a clear profit-sharing formula. If well-executed, profit-sharing can enhance employee motivation, productivity, and overall organization performance, particularly in environments that emphasize teamwork and collaboration. -       Gainsharing : Gainsharing

1584-428: The difference between what they are paid and what those at the highest level are being paid – it is important to an employee. There can be short-term and long-term effects of vertical pay dispersion. Research suggests some short-term effects of vertical pay dispersion can lead to increased outputs and productivity in employees. This is based on the idea that competition is a driver of human motivation, and prizes such as

1632-609: The field of labor, employment, the workplace, employer/employee organization, employment and labor relations, human resources, labor markets, income security, and the international dimensions of all of these areas. The organization takes a multi-disciplinarian approach and includes scholars from various disciplines including industrial relations, history, economics, political science, psychology, sociology, law, management, labor studies, and others. LERA promotes full discussion and exchange of ideas between and among all of its constituencies—academic, labor, management, neutral, and government—on

1680-526: The first 52 years of the organization, the IRRA was headquartered at the University of Wisconsin, Madison. In 1999, the organization moved its headquarters to the campus of the University of Illinois at Urbana-Champaign, and Paula Wells became the executive director. The organization was invited to make the Institute of Labor and Industrial Relations at the University of Illinois its home base, which later became known as

1728-709: The importance of fairness and distributive justice (Keppeler and Papenfuß, 2021, p. 1849-1850). Perspectives on Work Perspectives on Work is an annual publication of the Labor and Employment Relations Association (LERA). Perspectives on Work was founded in 1997 and is published annually. The magazine is based in Champaign, Illinois . It was published biannually until 2009. It contains news about LERA activities as well as scholarly articles on workplace law, economics and human resources (HR) from both an HR perspective as well as labor relations . The publication covers

1776-551: The job. Many countries, provinces, states or cities dictate a minimum wage . Employees' individual skills and level of experience leave room for differentiating income levels within a job-based pay structure. In addition to base salary, allowances may be paid to an employee for specific purposes other than performing the job. These can include allowances for transportation, housing, meals, cost of living, seniority, or as payments in lieu of medical or pension benefits. The use of allowances varies widely by country, as well as job level and

1824-476: The nation to compete successfully in the global economy. Like LERA, its parent organization, EPRN is non-profit and non-partisan. EPRN divides the large subject of employment and work into 15 topics and research clusters of 20–40 researchers: LERA publishes a number of research reports and books, as well as an annual research volume, an annual proceedings of LERA meetings, an electronically distributed newsletter, and an online membership directory. It also publishes

1872-548: The nature of job duties. According to Bussin (2019), the most prevalent types of variable rewards are generally categorized as short-term incentives (STIs) and long-term incentives (LTIs). While definitions may vary, these can typically be understood as follows: Short-term Incentives (STIs): Short-term incentives (STIs) are designed to reward exceptional performance achieved within a one-year period, focusing on past accomplishments. This retrospective approach ensures that employees are compensated based on measurable outcomes from

1920-462: The non-wage compensation that form the total remuneration package for an employee. While there is less research in this field, it is an important field, as benefits can create significant costs for employers, be they through compulsory means (e.g. compulsory pension schemes), or by the discretion of the employer (e.g. childcare allowances). Benefits can also be seen as an attractor for potential employees and can reduce turnover. Employers can offer

1968-524: The organization’s bottom line, making gainsharing a valuable approach for achieving better results. -       Bonus schemes : In the context of corporate finance and compensation, a bonus is a form of additional compensation awarded to employees, typically based on performance metrics or achieving specific goals. Bonuses can be monetary or non-monetary and are often used to incentivize employees to meet or exceed their performance targets. -       Commission Schemes : Commissions are

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2016-416: The overall intent of benefits is to keep employees satisfied with their employment, employers may provide benefits to mitigate disruption caused by increased union density and increased bargaining power. In other instances, employers may provide benefits as a result of a union bargaining for strengthened benefits. When an employer provides benefits, it is critical to note that benefit systems must adhere to

2064-420: The perceived value of benefits. This could include an employee having the potential benefit of flexible working, which may not be utilised. The employee will still note satisfaction with the potential benefit. However, benefit system satisfaction , is based on the: Benefit systems which are seen to be of value and managed well, will result in satisfied employees. These employees will feel that their employer

2112-419: The planning, development and results of research in these fields, as well as its useful application in both practice and policy. LERA is also disseminates the latest research, challenges in the field, and best practices to researchers, practitioners, and the public, by holding meetings, producing materials and publications. The association assumes no partisan position on questions of policy in these fields, but

2160-421: The previous year.  Common examples include profit sharing, gainsharing, bonuses schemes, and commission schemes. -       Profit sharing : Profit-sharing is a compensation strategy in which employers distribute a portion of the company’s profits to employees, typically as an addition to their regular wages or salaries. The goal is to motivate employees by aligning their financial interests with

2208-421: The principles of organisational justice. Organisational justice is seen as ‘the extent to which employees perceive workplace procedures, interactions and outcomes to be fair in nature’. The principles of organisational justice include: If an employee perceives that the benefits system lacks organisational justice, the perceived or actual satisfaction with benefits is undermined. The overall satisfaction with

2256-419: The system of benefit administration is called the benefit system satisfaction , while benefit level satisfaction refers to the satisfaction an employee has 'with the amount of benefits they receive'. It is important to note that benefit satisfaction can be viewed as actuarial value benefit satisfaction and perceived level of benefits. it is interesting to note that some employees are more satisfied with

2304-603: The “prize”, and has the additional organisational benefit of increased work effort and higher commitment to organisational goals. In public sector organizations, the application of Tournament Theory is more complex. The emphasis on equity and fairness in public service contexts often contradicts the high pay differentials that the Tournament Theory suggests. Public sector organizations are expected to uphold public service values. and excessive vertical pay dispersion could determine those values. Public sector organizations may adopt

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