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Q2. Expert argues that companies need to focus on strategy formulation, implementation, competition and the like and not waste their time and energy on matters relating to wage and salaries. Give your view point. (15) Ans) Compensation policies, implementation and feedback are part of organizational strategies. Company has to address matters relating to wage and salaries to attain organizational goals. The development of a total compensation strategy creates and influences a collective culture, offers Corporation and company-wide shared rules and directives, advances the implementation of the business strategy and promotes performance and results orientation. A total compensation strategy should take into account the following elements and orientation points: Fixing a value-based company management. Coupling with the long-term appreciation of the companys value . Market orientation for engaging qualified executives and specialists. Cost consciousness during conception and implementation. Taking local conditions into account.
Strategy and
Value Management
Articulating the company's long- and short-term business strategies and making sure they are aligned with current compensation approaches. Choosing the compensation approach that will best reward and reinforce the company's articulated strategic goals. Periodically evaluating the compensation approach against the business strategy to see if goals have been met and make necessary adjustments.
Step 2. Using an approach similar to that in Step 1, begin to operationalize the corporate strategy by developing a business strategy plan for business units and departments. Step 3. Establish job accountabilities and individual assignments so that each employee knows what to do to support the strategy. Step 4. Develop supporting reward systems. Step 5. Monitor and measure progress against the articulated strategy and goals. To accomplish this, the company's human resources and compensation professionals needed certain critical information:
Could the company re-educate the affected employees in time to have the desired results within the immediate and intermediate time frames? How many new people needed to be hired? What are the desired background and experience required to do the job? Were the new roles clearly defined and articulated to the employees and the customers? How many of the new roles required team work versus individual contribution? How will the company know when it is attaining its goals? And will cash be the only or the primary means of recognizing the attainment of individual and company goals? Without answers to these questions, the company's HR and compensation professionals would be unable to develop the people systems, particularly compensation systems that would support the achievement of the company's strategic goals.
geographic areas. This shift required a change from cold selling to improved account management and product enhancement. This, in turn, required the management and marketing staff to listen more closely and respond more carefully to their existing customer bases. The company did not neglect the cold call selling but now balanced it with this new overall strategy. As a result of this shift, recruiting emphasized customer servicing skills and the organization emphasized team work and coordination. There was also a shift in pay practices from rewarding only new dollar sales to a balance of rewards for retention sales, account management, service quality, and new sales both inside and outside of the current customer base. The process of aligning business and compensation strategy also requires determining what level of pay should be at risk.
Conclusion
Compensation remains an important tool for helping a company achieve its strategic objectives. However, companies must recognize that compensation does not operate in a vacuum. It is merely one step in a very dynamic strategic planning and implementation process. But by ensuring that compensation is aligned with their strategic objectives, companies stand a better chance of achieving those objectives and maintaining a competitive edge over their competitors.