Compensation Management System from a Business Ethics Perspective

Abstract

Employee perception of fairness in compensation methods and systems is important to achieve the purposes of "compensation management," which is a basic function of human resource management. As such, perception of organizational justice correlated with variables known to effectively impact job satisfaction, motivation, intention to leave, and burnout is determined on a large scale by the application of compensation and salaries. Here, it is crucial to establish and operate systems in which pay is fairly determined according to jobs performed, job performance, and market conditions. However, the literature and practice do not adequately focus on compensation. Consequently, there is uncertainty regarding how equitable compensation aligned to business ethics should be systematically conducted in Turkey. Therefore, in this study, employees' perceptions of a "fair" and "ethical" compensation management system was systematically discussed according to types of pay equity and organizational justice perception. In addition, this study is a systematic review that can contribute to the development of a scale to determine employees' perception of ethics regarding their organizations' compensation management systems. Based on an analysis of the related literature, the results of this study indicated that organizations should establish fair purposes and policies in compliance with the law; take advantage of scientific and objective methods such as job evaluation, market research, and performance-based pay; manage communication with employees regarding their demands and objections; and ensure employees' participation in decision making to ensure fair and ethical compensation. a Rıza DEMİR, PhD., is a research assistant of Business Administration. His research areas include human resource management and organizational behavior. Correspondence: