Compensation Strategies

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Compare & Contrast Compensation Strategies

Executive Summary

This research paper on “Compare & Contrast Compensation Strategies” explains about what do we mean by compensation and what role does it plays in the overall Human resource strategy. When we say “Compensation”, we refer to a systematic approach to provide monetary worth to workers in exchange for work performed. Compensation may accomplish several reasons like recruitment, job performance, and job satisfaction. In order to attract, motivate, and retain qualified personnel and to reward employees with the potential to assume responsible positions within the organization, Organization around the world will continue to develop compensation strategies and practices that maintain competitive salaries and that are also consistent with the economic requirements of the organization (NOVA,

Compensation strategy is just a part of the mega HR strategy and, therefore, the compensation strategy should be fully aligned with the overall HR strategy. So first of all the HR strategy sets up its goals and then from those goals, the compensation goals are derived. When the overall HRM Strategy states the low cost of services and employees, the compensation and benefits strategy cannot target the highest salaries at all levels (HRM ,

Then this paper discusses various compensation strategies and argued about the merits and demerits of each strategy. Finally this paper recommends the best strategy for the manufacturing company with 120 employees. The paper would well serve the purpose of guide to manager of the manufacturing company determine an appropriate compensation strategy and ultimately helps them to create a high performance work system, mostly known as HPWS.

Table of Contents


My Research Investigation5

Pay for Performance6

Incentive Based Pay6

Broad banding6

Gain sharing/Team-based Pay7

Competency -based Pay7

Hybrid Pay Systems8

Condition-based Pay8


My Recommendation9

Final Note to the Management10


Evaluating Different Compensation Strategies


I have conducted this investigative research to find out the most suitable strategy for my company. For the use of management, this report entails a detailed guideline about the how to devise an optimal compensation strategy for a manufacturing organization with120 employees, I as a member of the human resources department in this manufacturing organization with120 employees, my task it to evaluate different strategies and then recommend an appropriate strategy to the management and tell you which strategy will yield best results for the organization.

The compensation and benefits strategy sets the general rules for the compensation and benefits area in the organization and the owners and leaders of the area. The role of compensation department varies across different organizations, like in some organizations compensation department is just a subordinated department of line manager. In other organizations, the compensation and benefits manager is a very powerful employee in the organization with the right “veto”. High performance work system is the ultimate end that the company wants to have (Bradley, 1999).

Compensation is probably the most important dimension of HRM function, so it is of outmost importance that compensation should be selected very careful. In basic words, we can say that whole human resource management crust is right compensation and benefit ...
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