pay flexibility

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Is the use of payment and reward systems which allow total labour costs to rise and fall in line with business performance. Pay flexibility can therefore be achieved through the introduction of systems of variable pay, based on profit and performance. The concept forms part of the wider model of the ‘flexible firm’ and, within the model, pay flexibility serves the same end as numerical flexibility, to adjust labour costs to the vagaries of the business cycle.

Subjects: Human Resource Management.

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