Final answer:
To ensure that the compensation system encourages proper behaviors for organizational success, an organization should link effort and compensation to performance. If ineffective, recommendations include performance-based bonuses, transparent reward processes, goal alignment, and regular training programs connected to compensation growth.
Step-by-step explanation:
The question revolves around how an organization can ensure that its compensation system aligns with driving the correct behaviors to achieve organizational success, drawing from Chapter 34 of the referenced material. Organizations should incent behaviors that contribute to overall goals, linking effort and compensation with performance and outcomes. For example, rewarding effort acknowledges the dedication of employees, while basing compensation on costs incurred ensures that employees are reimbursed for their investments in the work activity, such as time or money spent on training.
If an organization's current system is ineffective, recommendations may include: implementing performance-based bonuses, increasing transparency around how rewards are determined, and aligning individual goals with company objectives to foster a culture of shared success. Additionally, regular training programs could be established to improve employee skills, which can be tied to compensation growth to encourage participation and personal development.
In essence, an effective compensation system should reflect the organization's values and priorities while promoting behaviors that lead to both individual and collective achievement, as seen in the 2003 study by Arthur et al., which indicates that well-structured training yields positive outcomes in terms of employee performance and organizational productivity.