Aligning compensation strategy with hr strategy & business strategy by dr. g c mohanta

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Aligning compensation strategy with hr strategy & business strategy by dr. g c mohanta

  1. 1. Aligning Compensation Strategy with HR Strategy & Business Strategy Dr. G C Mohanta, BE, MSc(Engg), MBA, PhD(Mgt) Professor Al-Qurmoshi Institute of Business Management Hyderabad
  2. 2. Compensation Strategy  Strategy refers to the fundamental directions that an organization chooses  Compensation Strategy focuses on the compensation choices those help the organization gain and sustain competitive advantage
  3. 3. Human Resource Strategy  Human resource strategy is designed to develop the skills, attitudes and behaviors among staff that will help the organization meet its goals.  Human resource strategy consists of principles for managing the workforce through HR policies and practices.  It covers the various areas of human resources functions such as recruitment, compensation, performance management, reward and recognition, employee relations and training.
  4. 4. Business Strategy  Business Strategy defines the direction in which organization is going in relation to its environment in order to achieve its objectives.
  5. 5. Aligning Compensation Strategy with Business Strategy  Compensation systems should align with the organization's business strategy  When business strategies change, Compensation systems should also change
  6. 6. Strategic Compensation Choices  Five strategic compensation choices are:  Objectives  Internal alignment  External competitiveness  Employee contributions  Management
  7. 7. Compensation Strategies in 3 Firms
  8. 8. Aligning Compensation Strategy with HR Strategy and Business Strategy
  9. 9. Aligning Compensation Strategy with HR Strategy 9 HR Strategy Compensation Strategy – Attract staff – Retain effective performers – Support change management process – Establish positive corporate reputation – Administer reward management to maximise positive impact – Enhance purchasing power of employees – Make Compensation package simple – Develop human resources – Total reward approaches that help to make the organisation a great place to work – Competitive pay structure that helps to retain high quality employee – Variable pay schemes that contributes to the motivation of the people – Performance management process that promotes continuous improvement – Performance management processes that identify learning needs and how they can be satisfied – Career family structure that defines knowledge and skills requirement – Total reward approaches that emphasize the importance of enhancing the work environment
  10. 10. Aligning Compensation Strategy with Business Strategy 10 Business Strategy Compensation Strategy – Achieving competitive advantage through innovation – Achieving competitive advantage through quality – Achieving competitive advantage through low costs – Provide financial incentive/reward and recognition for innovation – Link reward to quality performance – Review all reward practices to ensure they provide value for money

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