Strategic Compensation Compensation has been used as a technique to provide comfort for the tiredness, inadequacy, and desired of people after exerting effort in producing excellent results in particular areas of endeavor. It can be considered as a way to support the motivation of a person despite of his deficiencies or in response to his efforts. Compensation may be able to temporarily gratify a person; it might not be enough to satisfy the core of the inferiority. Compensation can be done in the form of positive or negative reinforcement. Usually compensation has been associated with the positive ones like rewards for the person to overcome the hardships he experienced.
Despite of that, negative compensation still exists which when done, it might entail a negative impact to the motivation of a person (Babitsky and Mangraviti 10-125). It might bring about inferiority in the mindset of the person. Negative compensation may manifest in two ways namely overcompensation and undercompensation. Overcompensation focuses on super high goals added with too many efforts to gain dominance, power and confidence. On the other hand, undercompensation pertains to the reduction of confidence by lacking courage and filled with fear as a person asks for help (Faure 5). Although extremes of strategic compensation may not be good, the balanced strategic compensation remains to be a vital part in human resource systems.
It shows how motivation is very important in organizations and management of people as compensation affects the overall productivity and performance of an individual. In the paper, strategic compensation would be analyzed with regards to strategic analysis, conventional way of payment and motivation, creation of internal stable compensation systems and establishment of market-competitive compensation systems.
In addition, the importance of strategic compensation would also be related to human resource systems that would be discussed in depth. Human resources have been important in the success of organizations because they are the ones responsible for the productivity and efficiency of the organizations and the other resources. Primarily, human resource is affected by compensation as it tries to support the needs and desires of the individuals working in organizations to keep them motivated (Smith and Mazin 39). Strategic compensation is vital to the performance and survival of an organization as it allows a group to be competitive in the market and survive for years.
In short, the use of compensation strategy supports sustainability of an organization. It also supports the human resource strategies and business activities to grow the business of a group. Once the strategic compensation is set correctly, it can contribute to the strengthening of an organization. On the other hand, if the strategic compensation is set wrongly, it can devastate the organization, sustainability is not reached and the full capacity and capabilities of the employees are not used (Rynes and Gerhart 20). There are four aspects that can be considered in strategic compensation: strategic analysis, traditional basis for pay and motivational concepts, building internally consistent compensation systems and building market-competitive compensation systems.
Each of the four aspects is very important in the discussion about strategic compensation. Strategic analysis focuses on the external conditions of the organization and its probable state in the future. It has been known as strategic since the activity entails sustainability and long term success and probable state of the organization.
It must consider the external conditions as agents that can affect the stability and performance of the company. In addition, the decision or choices to be made must be carefully considered (Rynes and Gerhart 66). It has been considered as analysis because of complex activities and processes in conducting it for a more secured future through studied anticipation. In connection to strategic compensation, strategic analysis allows the proper consideration for further actions with regards to compensation. The necessary actions may be taken in giving remuneration directly or indirectly to the employees without lowering their performance and endangering the organization. Next consideration is the traditional basis for pay and motivational concept.
Convention has set the bar of pay which depends upon the education, work experience and other skills of the employees (Rynes and Gerhart 49). In short, more experience and higher education leads to higher pay. Sometimes that should not be the only factor since motivation is not always about money. It may be affected by working schedule, workload, office atmosphere and many more. Third, building internally consistent payment system can assure the stability of the remuneration for the employees and provides balance for the organization too.
In short, the payment for the services rendered by employees will not affect the stability or condition of the organization negatively (Rynes and Gerhart 115). Lastly, having a competitive payment system in the market can be achieved by having the right remuneration for services rendered and continuously boosting the company performance (Rynes and Gerhart 49). Work Cited Babitsky, Steven and James Mangraviti. Understanding AMA Guides in Workers Compensation 2008. USA: Aspen Publishers, 2008. Print. Faure, Michael. Tort Law and Economics.
USA: Edward Elgar Publishing, 2009. Print. Rynes, Sara and Barry Gerhart. Compensation: Theory, Evidence, and Strategic Implications. USA: Sage Publications, 2003. Print. Smith, Shawn and Rebecca Mazin. The Hr Answer Book: An Indispensable Guide for Managers and Human Resources Professionals. USA: American Management Association, 2011. Print.