Research On Strategic Compensation System

In modern management, compensation is not only the carrier of traditional production costs, but also closely related with business strategy as a powerful tool for achieving strategic goals. Now the compensation systems of our country have many problems:①lack of uniform guideline and design basis;②lack of developmental perspective and systemic vision;③lack of flexibility of adapt to the rapid development and changes of enterprises. The reason causing these problems is that the enterprises realize the importance of compensation, but they always pay attention to basic systems design and related techniques directly in actual operation. Without the direction of business strategy, they will fail in build a successful compensation system which satisfies the staff and benefits the enterprise. This brings us a problem in great need of being solved--how to establish an effective strategic compensation system.Compensation covers all of the direct and indirect economic income that staff benefits from working for an organization, including salaries, bonuses, allowances, pensions and other welfares and health cares. Business strategy is a long-period overall design and action creed of management made according to the external environment and capabilities within enterprise to achieve long-term business objectives. Strategic compensation perspective regards compensation as a kind of human resource investment not as the input of cost. The key of it is how to make good use of limited resources effectively and to encourage the staff as much as possible. The business strategy drives the compensation system, the compensation system supports the business strategy and they interact on each other.Let's recall the developmental history of compensation: the early stage of the factory system--to stabilize the compensation at the minimum level, the scientific management stage--to focus on the work standards and cost savings, the behavioral sciences stage--to meet staff's psychological needs, and today the stage of strategic compensation system on the basis of incentive theory becoming an inevitable trend. Such compensation system should match with business strategy while it motivates staff effectively to make progress with the...