Strategic Compensations is a major component of the human resources system. There are many aspects within strategic compensation. The current literature in business strategy and human resource management has focused increasing attention on the need for a stronger link between management compensation and business strategy (Hufnagel). There are strategic and contextual factors within strategic compensation. Compensation represents both intrinsic and extrinsic rewards employees receive for performing their jobs. Consulting and assisting in management of a compensation program with the correct executive benefits is a dynamic process. There are many different aspects that are a part of strategic compensations system.
Strategic Compensation relates to as a component of the human resources system in many ways. Developing strategically-oriented reward systems is a complicated undertaking, however, as little empirical work has focused on either the structural or procession aspects of reward systems in practice, or the strategic implications of reward system designs (Von Glinow, 1985). Compensation is part of the recruitment and selection process, sometimes people choose to work for a certain company for compensation reasons. As a method to recruiting certain high quality job candidates a company might offer a one-time signing bonus. According to the textbook, “Accurate performance appraisals are integral to effective merit pay programs” (Martochio pg.19). When administering successful merit programs there has to be good performance appraisal practices as it relates to compensation professional skill in designing and implementing such plans. The attention given to person- and performance-based pay challenges traditional reliance upon job-based pay (Mahoney). Compensation is part of training when comes to developing and implementing pay for knowledge plans as training programs. Companies that adopt pay for knowledge systems must accordingly ensure that all employees have equal access to the training needed to acquire higher-level (Martocho pg.20). When it comes to compensation and career development, an employee advances in their career then the employee compensations changes. Compensation is also a key topic when it comes to collective bargaining. According to the textbook, “Unions have fought hard for general pay increases and regular COLAs to promote their members’ standard of living” (Martochio pg. 20). Compensation relates to employment termination in several ways. Some companies award severance pay when involuntary termination takes place. But sometimes when employees initiate voluntary termination for retirement or to go work for another company. Using early retirement programs are used by some companies to reduce workforce size and compensation expenditures. Federal laws that apply to compensation practices are grouped accordingly to four themes such as income continuity, safety, work hours, pay discrimination, accommodating of disabilities, family needs, and prevailing wage laws. ( Martocho pg21). According to the textbook, “The federal government enacted income continuity, safety, and work hours laws to stabilize individuals’’ incomes when they became unemployed because of poor business conditions or workplace injuries, as well as to set pay minimums and hour limits for children (Martocho pg.21).
There are many things involved with setting the stage for compensation. Pay must relate to the accomplishment of goals, the company mission, and vision (Landsberg). When it comes to setting the compensation some organizations have seniority and merit pay. According to the textbook, “The object of seniority pay is to reward job tenure or employees’ time as members of a company explicitly through permanent increases in base pay” (Martocchio, pg. 60). Seniority pay can eliminate a company showing favoritism to a certain group of employees. With seniority pay it allows employees to see the pay schedule in advance. The...
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