The Design Of A Company’s Compensation System Based On Equity Theory

The compensation is an important issue that both enterprises and employees areconcerned about. If the enterpriser wants to fully give play to the function ofcompensation, the compensation system has to be fair and just. However, the realityis contrary. How to design the fair compensation system is a priority problem in theHRM practice.This paper aims to build a fair compensation system based on Equity Theory,taking into account of three kinds of compensation fairness, namely, the exteriorfairness, the interior fairness and the individual fairness. The problems related tocompensation fairness existing in A Company also exist in some other similarcompanies. Therefore, the paper explores the application of fair compensationsystem in A Company, that is, trying to realize the interior fairness through positioncompensation, to realize the exterior fairness through compensation survey, and torealize the individual fairness through performance compensation. At the same time,the paper also designs the realization ways of fair compensation under the conditionof fair conflicts and the resource limitations.The main conclusions of the paper are as follows. Firstly, to design enterprisefairness compensation system should base on Equity Theory and needs to find themeasures by considering three aspects, namely, the exterior fairness, the interiorfairness and the individual fairness. Secondly, there are many ways of realization offairness compensation system. Each way has its own application spectrum. Thecompany should adopt proper way according to its own conditions. Thirdly, Thispaper puts forward how to construct the fair compensation system under thecondition of fairness conflicts and the resource limitations, which is a creativepoint of the paper.