Note on Compensation and Incentive Systems

Case Solution

Michael J. Gibbs
Harvard Business School ()

Provides a brief analysis of the issues involved in designing an effective compensation system with a particular focus on incentives. Provides an analytical framework for thinking about compensation. Topics covered include the composition of the salary package, fringe benefits, and training. Incentive analysis discusses the trade-off between incentive and risk, the problem of performance measurement, and the use of promotions as incentive compensation. Designed for use with a Teaching Module for Compensation.

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