A Case Study about Compensation Be Strategic: A Review Of Compensation Management Practice In Leading Multinational Firms
Abstract: Compensation is a key element of the employment relationship and, in addition to being the single greatest operating cost for many organizations, it has been advocated by some recently as a tool for enhancing organizational performance and sustained competitiveness. Contemporary approaches to compensation emphasize the importance of aligning employee behaviors to the strategic direction of the organization. Such approaches – broadly labeled strategic compensation, have become widely adopted by organizations. Yet our understanding of the nature of strategic compensation management is limited. Though strategic pay has been the subject of considerable academic and practitioner attention, it is argued that orthodox theories of strategic pay have a number of important shortcomings.
Introduction: Contemporary approaches to compensation emphasise the importance of aligning employee behaviours to the strategic direction of the organisation, an approach often labelled ‘strategic compensation’. Yet our understanding of the nature of strategic compensation management in practice is limited. The research that forms the basis for this paper sought to explore the realities of contemporary compensation management in seven leading companies operating globally in the fast moving consumer goods sector. It has reviewed empirically what they are doing in relation to compensation, how they are doing it and above all, why. To address these issues, the study uses multi-level analysis and multiple methods to gain a rounded picture of contemporary compensation management in context.
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