Compensation is a critical piece of overall human resource strategy.
Because compensation is both visible and important to employees, a
compensation program designed to communicate and reward strategic goals
increases the probability that employees will not only understand what those
goals are but also will achieve them. Because employees also understand that
compensation dollars are important to the organization, the strategic intent of
other human resource efforts, such as performance management, recruiting,
career development, and the like, is also clearer if their designs are consistent
with the compensation program. In short, realization of compensation strategy
requires that the money match the message.
Developing a compensation strategy requires the same process of
definition, diagnosis, and design described above for human resource strategy.
This chapter provides some guidelines for beginning this process.