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How Organizations Establish Their Reward Systems

Decent Essays

Culture has been a highly debatable topic for decades in which both researchers and practitioners have conducted extensive studies to show how organisations establish their reward systems. How organisations now decide their compensation strategy has come under close scrutiny as the world becomes more globalized with evidence suggesting that internationalization is becoming the norm. This literature review will critically examine the definition of culture and the fundamental aspects as to how social and organisational culture are interlinked and the impact it now has on managers and how they implement their reward strategy across borders.
Although there is no standard definition of culture, the term has been embedded in human history. Terpstra and David (1991) define culture as members of a society with similar ideas, customs and social behaviours that distinguishes one group from another. Their work identifies several characteristics that make up culture, it is imperative that members should have a unified set of values and beliefs towards a common purpose where lessons are learnt and passed on from one generation to the next. Culture can be unique and used to differentiate one group from another and that it’s established to provide solutions to challenges that all individuals face. Furthermore, evidence suggests that cultural differences are becoming increasingly more apparent in todays current economic climate for organisations and the extent that local norms and values

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