Chapter 8: Corporate Business Strategies and Compensation Strategies

SourceReprinted from Business-Driven Compensation Policies: Integrating Compensation Systems with Corporate Strategies.Copyright 2001 by Robert L. Heneman. Used with the permission of the publisher, AMACOM, a division of American Management Association International, New York, NY. All rights reserved. http://www.amacombooks.org

It is essential to have the corporate business strategy in hand before developing a new compensation system or revising an existing one. Most often, the corporate business strategy is readily available. Sometimes, however, while the corporate business strategy has been established, it may be difficult to locate. Other times, it may need to be formulated. Strategy formulation is especially likely to take place in lower levels of the organization. There may be a corporate plan, for example, that has little specific direction for a specific division or plant of the company. Under these circumstances, a local business strategy may need to be formulated prior to work on a compensation system. In this chapter, sources of strategies will be discussed along with strategy formulation.