Compensation Strategy Essay Example | Topics and Well Written Essays - 1000 words

Compensation Strategy - Essay Example However, any compensation strategy must bear the interest and goals of the company and the employee. As such, to achieve this balance, variant compensation strategies apply uniquely in a given company. This paper highlights and evaluates three compensation strategies that can apply in our manufacturing company. Moreover, it will recommend the modes of applying these compensation strategies while considering the company and employee’s interests. Introduction A compensation strategy refers to the planned utilization of the pay system as a fundamental integrating mechanism geared towards achieving company objectives and rewarding employees subject to limitations within the company (Gomez-Mejia, Berrone, & Franco-Santos, 2010). As the human resources manager in our manufacturing company, I have the mandate of evaluating the different compensation strategies that are available for adoption within our organization. Actually, the best compensation strategy will ensure attraction and retention of critical employees. Our manufacturing company has 120 employees and various compensation strategies can apply to them. The compensation strategies that I will evaluate in this paper include the Competitive strategy, Retention-based strategy, and the performance- based strategy. I will hence compare and contrast them with an aim of applying them in our organization. Indeed, the compensation strategies should be reasonable to both the employees and the company itself (Deb, 2009). I will therefore determine recommendations on how to implement them within our organization. Research findings I have done substantial research on the three compensation strategies and gathered relevant information that can help in the application of these strategies in our manufacturing company. Most specifically, in the competitive strategy, the company pays employees the market rate. On the other hand, in the retention-based strategy, the employees earn more as they stay in the company. Additi onally, in the performance- based strategy, the pay relates to the performance of an employee, the team or the entire organization. Specific findings on each compensation strategy follow here in. Findings on the competitive strategy It is notable that one of the main goals of any company is to remain competitive in the market and where possible gain competitive advantage over other competitors (Kumar, 2010). As such, the competitive strategy seeks to retain existing employees in offering them rewards that equal to industry standards. Additionally, this compensation strategy seeks to attract potential employees by motivating them to join the company as it offers compensation that meets what others in the industry offer (Petroleum Human Resources Council of Canada, 2012). Nevertheless, the competitive strategy offers the reference company no competitive advantage over its competitors since its compensation rates are at par with those of its competitors. Hence, this strategy may not mo tivate employees to remain in the company for a long time. Indeed, this strategy keeps the management at risk of fluctuating wages, as the industry would dictate. As such, where the company cannot keep up with the escalating wages, then there is a high risk of employee turnover. Moreover, the existing employees are at a high risk of leaving the company if another company offers higher rewards than the reference com