MHR 749 Chapter Notes - Chapter 2: Virtuous Circle And Vicious Circle, Competitive Advantage, Takers

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Strategy: is a fundamental business decision that an organization makes to achieve its strategic objectives. A strategic perspective requires a focus on compensation decisions that help the organization gain and sustain competitive advantage. The greater the alignment or fit between the organization strategy and compensation system, the more effective the organization. A currently popular theory tells managers to tailor their pay system to align with the. When business strategies change, so should the pay system. short response time to market trends. Therefore, the compensation system should reward innovation, and hr should be looking to hire those that are creative, and risk takers. For example, let"s say the business strategy is to be an innovator. Employee"s posses the abilities to executing business strategy and compensation are key to. There should be an alignment between its compensation strategy and its overall hr strategies and system, which include hiring, training, and development. Support hr strategy organization"s pay strategy. attracting, retaining, and motivating employees.

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