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Pages:
2 pages/≈550 words
Sources:
3 Sources
Level:
MLA
Subject:
Business & Marketing
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
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Topic:

Customization of Compensation Strategies (Essay Sample)

Instructions:

Firms have the choice to lead the market by paying more than competitors when developing their compensation strategies. On the other hand, some companies make the decision to lag the market by paying less than their direct rivals. As if that is not enough, there are yet some organizations that decide to match the market by paying almost the same salary as competitors. The different situations show that firms can decide to lead the market for some jobs and lag for others. The decision of firms, therefore, to customize their compensation strategies is influenced by three main factors, including the organizational culture, the need to motivate workers, and changes in the market.

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Content:

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Customization of Compensation Strategies
Firms have the choice to lead the market by paying more than competitors when developing their compensation strategies. On the other hand, some companies make the decision to lag the market by paying less than their direct rivals. As if that is not enough, there are yet some organizations that decide to match the market by paying almost the same salary as competitors. The different situations show that firms can decide to lead the market for some jobs and lag for others. The decision of firms, therefore, to customize their compensation strategies is influenced by three main factors, including the organizational culture, the need to motivate workers, and changes in the market.
First of all, the culture of an organization plays a significantly huge role in the establishment of the compensation strategy. There are organizations with the culture to compensate employees. Such organizations reward employees for their performance in addition to their basic salary (Hallock 53). There are also organizational cultures that are keen to develop the careers of employees. The companies end up paying employees little money because most funds are used on employee development. There are yet organizations with cultures that compensate senior workers more than their junior subordinates. Organizations with such cultures tend to pay some job positions more money than others.

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