strategic human resource management compensation

1. STRATEGIC HUMAN RESOURCE
MANAGEMENT
Strategic compensation

2. What is a compensation strategy?
 A compensation strategy is how your organization
offers pay and benefits to employees. This includes
setting salary ranges, determining how raises and
bonuses are calculated, and identifying which
additional benefits you want to offer to your staff.
 An effective compensation strategy should reflect
your organization's needs, the culture you want to
create, and trends in the external market.

3. Why is a compensation strategy
important?
 Your compensation policy can be the difference
between potential employees applying to work for
your organization or your competitors. It helps you
compete for top talent, reduce turnover rates, boost
employee performance, and more.

4. Let’s look at a few of the perks of having an
effective compensation strategy:
 Attract qualified job seekers
 You'll attract more highly skilled workers when you
offer a competitive salary range and fringe benefits.
With the global labor shortage, there are more open
positions than there are qualified workers to fill them.
To fill your vacant positions, you need to offer a base
salary and perks at or above current market rates.
 When you have a standout compensation program,
job candidates will view you as an employer of
choice.

5. Boost employee morale and engagement
 When employees are offered the perks and salaries
they want, they’ll feel valued and appreciated. When
they feel taken care of, they’ll be inspired to improve
their individual performance, which increases
productivity and employee engagement so that the
organization can meet its business goals.

6. Reduce turnover
 When your employees are satisfied with their pay
and the perks you provide, they’re more likely to stay
with your organization instead of searching for new
opportunities with your competitors. This reduces
turnover and saves you time and money on hiring
and recruitment efforts and training to replace
employees.

7. What are the different types of
compensation strategies?
While every compensation plan looks different, you need to
be aware of a few popular types of compensation.
Common compensation strategies include:
 Straight salary: Paying workers a base salary based on
their role and job title.
 Salary and commission: Paying workers a base salary
and added commission.
 Commission only: Generally used for independent
salespeople, this involves only paying workers
commissions for the sales they make.
 Team commissions: Similar to regular commission
structures, salespeople earn commissions based on their
sales. However, commissions and bonuses are based on
how well the team performs as a whole.

8.  Profit margin or revenue-based: Employers pay
workers entirely with the profits generated by the
organization. Profit margin compensation is common with
startups.
 Residual commission: Employers pay workers a
commission based on sales and continue to earn
revenue from their accounts, even after they leave the
company. This is the least common compensation
method, but some organizations may offer it to top-
performing workers.
 Dearness allowances
 Incentives
 Bonus
 commissions

9. non- financial compensation strategies:
 Recognition of merit through certificates
 Offering challenging job opportunities
 Promotion growth prospects
 Comfortable working conditions
 Competent supervision
 Job sharing & flexi-time

10. Pros & Cons of Strategic compensation
 Career development
 Ensure better growth
 Increase organizational effectiveness
 Ensure conflict management
 Help to motivate employees
 Enhance job satisfaction
 Provide better managerial experience

11.  Legal liabilities
 Lack of transparency
 Cost bearing
 Improper development programs
 Biasness, favoritism
 Conflict arises

12. Thank you!