Examples of employer objectives of pay:

• Motivation - Money is a good motivator to make employees work harder.
• Controlling costs - Salaries are fixed costs so they are able to be planned and accounted for.
• Recruitment - Good pay rates help to attract a large number of skilled workers.
• Prestige - It makes the company look good if they are able to pay the highest rate and may help to attract investors.

Examples of employee objectives of pay:

• Purchasing power - Gives the individual more money to spend and helps to act against inflation.
• Recognition of effort - Rewards the effort that the person has put in.