CHAPTER 2
THE REWARD SYSTEM: COMPENSATION
AND NONCOMPENSATION DIMENSIONS
The focus of Chapter 2 is that work is a natural process. Work need not, in fact should not, be
considered an unpalatable, unacceptable part of life. Directing work toward the improvement of the
individual and society makes all work effort dignified and meaningful. In the exchange process, as
people provide their talents toward the improvement of the productivity and profitability of the
organization, rewards for their efforts are expected and demanded. Five major points presented in this
chapter are:
1. People work to survive;
2. Work can provide an extremely broad array of rewards;
The reward system is divided into two parts—the compensation system and the noncompensation
system. Although the compensation system may actually include hundreds of components, those
included within the noncompensation system may range to infinity. The compensation system model
developed in this chapter has eight major dimensions:
1. Pay for work and performance
5. Deferred income
6. Spouse (family) income continuation
The noncompensation system model has seven major parts or dimensions:
1. Enhance dignity and satisfaction from work performed
2. Enhance physiological health, intellectual growth, and emotional maturity
The thousands of components included within each of these 15 compensation and
noncompensation dimensions not only provide a subsistence form of survival, but also, in the modern,
high-technology society, grant workers luxury and influence opportunities to achieve a most enjoyable
standard of living.
A very important responsibility of any manager in an organization is to give purpose and provide
direction for human effort. When all members are working together in a common effort with a common
mission and common goals, human bonds begin to weave together.
KEY CONCEPTS:
2. Work can provide extensive human satisfaction.
4. Organizational reward programs consist of compensation and noncompensation components.
SIGNIFICANT POINTS OF INTEREST
2. Through their work efforts, employees receive a wide array of rewards that otherwise would
be unavailable to them.
4. Rewards employers provide to employees can be classified into two basic components:
compensation rewards and noncompensation rewards.
6. Noncompensation rewards include the almost infinite variety of rewards that improve the
7. For most employees, their job-related pay is their major source of revenue that provides for
their security and luxuries.