REMUNERATION PLANS AND BUSINESS STRATEGY
Remuneration plans, like any other HR activity, must become an input to formulating a business strategy. But in most companies, this integration rarely occurs. The general practice is to pay what competitors pay or to adhere to the "corporate policy".
The actual remuneration plan should not be strictly a matter of what is being paid in the market place.
Instead, wage and salary plans must derive from an assessment of what must be paid to attract and retain the right people, what the organisation can afford, and what will he required to meet the organization’s strategic goals.
Following illustrates how different salary and wage strategies can be applied to firms that differ in:
(i) their business strategies and
(ii) their market position and maturity.
Remuneration plans, like any other HR activity, must become an input to formulating a business strategy. But in most companies, this integration rarely occurs. The general practice is to pay what competitors pay or to adhere to the "corporate policy".
The actual remuneration plan should not be strictly a matter of what is being paid in the market place.
Instead, wage and salary plans must derive from an assessment of what must be paid to attract and retain the right people, what the organisation can afford, and what will he required to meet the organization’s strategic goals.
Following illustrates how different salary and wage strategies can be applied to firms that differ in:
(i) their business strategies and
(ii) their market position and maturity.