Three tests to assess competitive advantage of a strategy:
Align: Does the pay strategy align with the business strategy, economic and sociopolitical conditions, and the overall HR system?
Differentiate: Is the pay strategy different and difficult to imitate?
Each compensation strategy is woven into the overall fabric
3. Add value: Does the pay strategy add value by providing a return on investment (ROI) in compensation?
Labor = largest controllable costs
Circuit City vs. Best Buy