HRM3705 CHAP7 SU6

COMPENSATION MANAGEMENT



CHAPTER 7 (Study unit 6)
Defining Competitiveness




Chapter Topics


• Compensation Strategy: External Competitiveness

• What Shapes External Competitiveness?

• Labor Market Factors

• Modifications to the Demand Side

• Modifications to the Supply Side

• Product Market Factors and Ability to Pay




1

, Learning objectives

After studying Chapter 7, students should be able to:



• E l i the
Explain th importance
i t off external
t l competitiveness
titi t the
to th pay model.
d l

• Discuss the factors that influence external competitiveness.

• Discuss the differences among labor market, product market, and
organizational factors in determining external competitiveness.

• Explain the different pay policy positions and the consequences of using
each.
each




Chapter Topics (cont.)

• Organization Factors

• Relevant Markets

• Competitive Pay Policy Alternatives

• Consequences of Pay-Level and Mix Decisions: Guidance from the
Research

• Your Turn: Sled Dog Software

• Still Your
Y T
Turn: Fit the
th Pay
P Mix
Mi Policy
P li tot the
th Compensation
C ti Strategy
St t




2

, Compensation Strategy: External
Competitiveness
• External competitiveness is expressed in practice by:
– Setting a pay level that is above, below, or equal to that of competitors
– Determining mix of pay forms relative to those of competitors
• Pay level and pay mix decisions focus on:
– Controlling costs
– Attracting and retaining employees




What Is External Competitiveness?




External competitiveness
refers to pay relationships
among organizations - an
organization’s pay relative to
its competitors.




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