2 Pages

Human Resources and Organizational Behaviour
Course Code
HROB 3010
Rhonda Gordon

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Chapter 2: Strategy: The Totality of Decisions Similarities and Differences in Strategies -greater the alignment (or fibetween organizational strategy and the compensation system, the more effective the organization -companies face different conditions, customers, and talent and therefore need different pay strategies -there is variance in strategic perspectives among companies in different industries and even among companies in the same industries Strategic perspective- a focus on compensation decisions that help the organization gain and sustain competitive advantage -sometimes different business units within the same company will have very different competitive conditions, adopt different business strategies and thus fit different compensation strategies Strategy -fundamental business decision that an organization has made in order to achieve its strategic objectives (ie. What business to be in, how to gain competitive advantage) Competitive advantage- a business practice or process that results in better performance than one’s competitors Support Business Strategy -managers should tailor their pay systems to align with the business strategy -differences in firms strategy should be supported by corresponding differences in human resource strategy (including compensation) -greater alignment (or fibetween firm and compensation system, the more effective the organization Strategic Choices: Corporate Business unit Strategic Employee strategies HR strategies compensation attitudes and Competitive objectives, behaviours advantage strategic plans, decisions vision, and values Social competitive and regulatory enviroment The Pay Model Guides Strategic Pay Decisions Strategic Compensation Decisions: -objectives (how should compensation support business strategy and be adoptive to the cultural and regulatory environment?) -alignment (how differently should the various types and levels of skills be paid within the organization?) -competitiveness (how should total compensation be positioned against out competitors? What forms of compensation should be use?) -contributions (should pay increases be based on individual and/or team performance, on experience and/or continuous learning, on improved skills, on changes in cost of living, on personal needs, and/or on each business unit’s performance?) -management (how open and transparent should pay decisions be to all employees? Who should be involved in designing and managing the system?) Stated Versus Unstated Strategies -all organizations that pay people have compensation strategy, either written or stated strategies while others may not even realize they have a compensation strategy -unstated compensation strategies is inferred from compensation practices Developing A Total Compensation Strategy-4 Steps
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