Analyses the use of compensation systems and the signals that they give out to employees. Suggests that they may often get mixed messages about the system′s intentions and objectives. Examines the case of performance‐related pay, which a recent survey found did not help create sustained high performance, but in fact could in some cases be demotivating. Provides another example of “mixed messages” ‐ the high pay awards often received by top management, especially when their employees receive none, or are even made unemployed.
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