In most of the institutions of employment compensation represents a substantial part of operational costs, therefore, your success, or even its survival, depends on how effectively these costs are controlled and how to achieve productivity of employees in exchange for the salaries they are paid. Productivity in turn, will depend on how well employees are motivated by the payment they receive for their work.
For most employees pay has a direct effect on their standard of living, and the recognition they can get into their work. Payment is also a quantitative measure of "status" in the workgroup. A difference in hourly pay can psychologically affect the positions of power and authority in a group, this employee can be very sensitive.
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