Question

Discuss and explain the 5 main steps in the Compensation Strategy Formulation process. Which do you think is the most difficult state?

Answer 1

Steps in the compensation strategy:-

The steps are being followed -

1. The first step in the compensation strategy is to define employee behavior which is necessary for organizational success and also simultaneously identify the characteristics of people who can perform those behaviors.
2. The next step is to define the specific roles of both the reward system and the compensation system.
3. Based on the organizational environment, it is needed to identify the appropriate compensation component I.e. determining the compensation mix.
4. This step includes developing the policies for the establishment of a total amount of compensation which the employees would receive I.e. it would determine the compensation level.
5. The last step is the conduction of the evaluation of the proposed strategy which identifies the success criteria.

In my opinion, the most difficult step is the first step where it needed to first identify the organizational culture and later the employee behavior, which can be beneficial for the organization's success. It is also needed to analyse different characteristics of employees so as to put those behaviors appropriately.

Hope this helps :)