BUSI 645 Week 7 Group Project: Final Example

Just Pay, Fair Incentives and Benefits That Care: Three Compensation Topics Through a Christian Worldview

Introduction

Compensation is usually discussed as strategy: how much to pay, in what form and for what results. Martocchio (2017) presents it that way, as a set of choices that should support a company's competitive strategy. Our group believes that compensation decisions are also moral decisions, because pay determines whether people can support their families, signals how an organization values their work and shapes how they treat one another. This paper examines three key topics from the course, pay fairness, incentive pay and benefits, along with a brief look at executive pay, through the lens of a Christian worldview. For each topic we summarize what the course teaches, consider what research shows and ask what Scripture adds.

Pay Fairness and Internal Equity

Martocchio (2017) describes internal consistency, paying jobs of similar value similarly, as one of the foundations of a compensation system, and the Equal Pay Act requires that women and men performing substantially equal work in the same establishment receive equal pay, unless a difference rests on seniority, merit, output measures or some factor other than sex. Fairness also has a psychological side. Card et al. (2012) gave a randomly selected group of University of California employees information about a website listing university salaries and found that staff who learned they ranked in the lower half of pay within their own department and job title felt less satisfied and began looking elsewhere, while those in the upper half did not change. Pay rank mattered more than pay level.

Scripture treats fair and honest dealing with workers as a matter of justice before God. The law of Moses commanded employers not to oppress a hired worker, poor and needy, and to hand over the day's wages before the sun went down, since the worker depended on that money (English Standard Version Bible, 2001/2016, Deuteronomy 24:14-15). James later warned rich landowners that the wages they had held back by fraud cry out against them and that the harvesters' complaints have been heard by the Lord of hosts (English Standard Version Bible, 2001/2016, James 5:4). These passages address withholding and delay rather than internal pay structures, but they establish a principle that applies to both: workers depend on their pay, and employers will answer for how they handle it. A pay structure that no one can explain is not neutral; it asks employees to trust what they cannot see. Regular pay equity audits, clear criteria for movement within ranges and prompt correction of unexplained gaps are practical expressions of that justice. One of our members works at a regional bank where tellers hired in the past year earn more than tellers with five years of service, a gap no one has explained to the longer-serving staff. Card and colleagues' findings suggest those tellers are the ones most likely to leave once they learn of it, and the biblical principle suggests the bank owes them either a correction or an honest explanation.

Incentive Pay and Motivation

Incentive pay links compensation to measurable results, and the course presents it as a powerful but demanding tool (Martocchio, 2017). The best-known evidence comes from Lazear (2000), who studied Safelite Glass Corporation's change from hourly wages to piece rates for windshield installers and found that output per worker rose 44 percent, partly because existing workers produced more and partly because the company attracted and kept more productive workers. Profits rose as well. Incentives work best, the course emphasizes, when performance can be measured fairly and employees control the results.

Scripture affirms that work deserves its reward. Sending seventy-two followers ahead of Him, Jesus told them to accept the hospitality offered, since a worker has earned the pay he receives (English Standard Version Bible, 2001/2016, Luke 10:7), and Paul applied the same principle to those who labor in teaching (English Standard Version Bible, 2001/2016, 1 Timothy 5:18). Rewarding diligence is consistent with that principle. At the same time, Scripture warns against reducing people to their output. When the landowner in Jesus' parable gives the late arrivals a full day's wage, matching what the dawn crew received, teaches about God's generosity rather than wage policy (English Standard Version Bible, 2001/2016, Matthew 20:1-16), yet it reminds employers that people are not merely units of production. A Christian approach to incentives would reward contribution while guarding against designs that set coworkers against each other or pressure people to cut corners. In practice that might mean combining individual measures with team measures, building quality into every incentive formula and reviewing whether an incentive has changed behavior in ways no one intended, such as salespeople pushing products customers do not need.

Benefits as Care

Benefits account for a sizable portion of what employers spend on people, and the course sorts them into two groups: those the law imposes, from Social Security taxes to workers' compensation coverage, and those an employer adds by choice (Martocchio, 2017). Paid sick leave is a useful test case because many employers are not required to offer it. Looking at places that passed sick leave mandates, Callison and Pesko (2022) found more workers covered, more days taken off by those newly covered and less presenteeism, meaning fewer people working while ill.

Scripture's command to rest provides a framework for thinking about benefits. The Sabbath command extended rest not only to the head of the household but also to servants, livestock and the foreigner within the gates (English Standard Version Bible, 2001/2016, Exodus 20:8-10). Rest was not a reward for high performers but a provision for everyone, including those with the least power to demand it. Benefits such as paid sick leave, when designed to be usable by hourly workers, reflect that same concern. They acknowledge that workers have bodies that get sick and families that need care.

A Note on Executive Pay

Executive compensation tests these principles most sharply. Bebchuk and Fried (2003) argued that executive pay should be seen not only as a tool for solving the agency problem between shareholders and managers but also as part of that problem, since executives may influence their own pay. Mueller et al. (2017), however, found that firms with greater pay differentials between top and bottom jobs were larger, more highly valued and stronger performers, consistent with differences in managerial talent. The research does not settle whether high executive pay is just. Scripture does not set a ratio, but it consistently warns against wealth gained at the expense of the poor and calls leaders to serve rather than to be served. Boards that set executive pay with transparency and in view of how the rest of the workforce is paid honor that call.

Conclusion

Across these topics, a Christian worldview does not replace the strategic tools taught in this course; it sets the values those tools should serve. Fair pay structures express justice, well-designed incentives honor the worth of work without reducing people to output and benefits that workers can actually use reflect care for the whole person. Organizations that make compensation decisions with these values in view can be both competitive and faithful.

References

Bebchuk, L. A., & Fried, J. M. (2003). Executive compensation as an agency problem. Journal of Economic Perspectives, 17(3), 71-92. https://doi.org/10.1257/089533003769204362

Callison, K., & Pesko, M. F. (2022). The effect of paid sick leave mandates on coverage, work absences, and presenteeism. Journal of Human Resources, 57(4), 1178-1208. https://doi.org/10.3368/jhr.57.4.1017-9124R2

Card, D., Mas, A., Moretti, E., & Saez, E. (2012). Inequality at work: The effect of peer salaries on job satisfaction. American Economic Review, 102(6), 2981-3003. https://doi.org/10.1257/aer.102.6.2981

English Standard Version Bible. (2016). Crossway. (Original work published 2001)

Lazear, E. P. (2000). Performance pay and productivity. American Economic Review, 90(5), 1346-1361. https://doi.org/10.1257/aer.90.5.1346

Martocchio, J. J. (2017). Strategic compensation: A human resource management approach (9th ed.). Pearson.

Mueller, H. M., Ouimet, P. P., & Simintzi, E. (2017). Within-firm pay inequality. The Review of Financial Studies, 30(10), 3605-3635. https://doi.org/10.1093/rfs/hhx032