General Business BUS206 Lecture 2: Module 2 - Ch. 2 Overview
22 Sep 2020
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Strategy: a fundamental business decision that an organization has made in order to achieve its strategic objectives. A strategic perspective focuses on those compensation decisions that help the organization gain and sustain competitive advantage. The greater the alignment, or fit, between the organizational strategy and the compensation system, the more effective the organization. Pay systems should align with the organization"s business strategy. When business strategies change, pay systems should also change. Key steps in formulating a total compensation strategy. Best fit approach suggests that a company is more likely to achieve competitive advantage if pay practices are aligned with business and overall hr strategies. Best practices approach suggests that there exists a set of best-pay practices which can be applied universally across all situations. Pay differences among internal jobs can affect results. Paying higher than the average paid by competitors can affect results. All dimensions of the pay strategy need to be considered.
