HRM3705 SU3

COMPENSATION MANAGEMENT


Chapter
3 Defining Internal Alignment
CHAPTER 3 (Study unit 3)
Defining
D fi i IInternal
t l Alignment
Ali t



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Chapter Topics

• Compensation Strategy: Internal Alignment

• Structures Vary
y Among
g Organizations
g

• What Shapes Internal Structures?

• Strategic Choices in Designing Internal Structures

• Guidance from the Evidence

• Consequences of Structures


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, Learning Objectives

After studying Chapter 3, students should be able to:

• Explain why internal alignment is an important pay policy issue and how to evaluate
internal alignment.

• Discuss the three (3) key factors that define an internal pay structures.

• Identify and describe how external and organization factors shape the design of pay
structures.

• Discuss the pros and cons of egalitarian and hierarchical structures and how they
relate to an organization’s strategy.

• Describe the key effects associated with an internally aligned pay structure.
structure

• Discuss the impact of internal pay structures on efficiency, fairness, and compliance
in the pay system.




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Compensation Strategy:
Internal Alignment

• Issues in a strategic approach to pay
– Setting objectives
– Internal alignment
• Addresses relationships inside the organization
• The relationships form a pay structure that should:
™ Support the organization strategy
™ Support the work flow
™ Motivate behavior toward organization objectives




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