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Designing a Compensation Strategy Aligning Pay With Business Goals, Job Evaluation Methods, Internal and External Equity Considerations

Designing a Compensation Strategy Aligning Pay With Business Goals, Job Evaluation Methods, Internal and External Equity Considerations
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Author(s): Manasvi M. Kamat (MES Vasant Joshi College of Arts and Commerce, India), Manoj S. Kamat (DCT's Srinivassa Sinai Dempo College, India), Nigel Barreto (DCT's SS Dempo College, India), Prashant Kalshetti (Global Business School and Research Centre, Dr. D.Y. Patil Vidyapeeth), Abhijeet Das (C.V. Raman Global University, Bhubaneswar, India), P. Selvakumar (Department of Science and Humanities, Nehru Institute of Technology, Coimbatore, India)and Manjunath T. C. (Rajarajeswari College of Engineering, India)
Copyright: 2026
Pages: 28
Source title: Strategies for Effective Employee Rewards and Compensation Management
Source Author(s)/Editor(s): Wasantha Rajapakshe (Sri Lanka Institute of Information Technology, Sri Lanka)
DOI: 10.4018/979-8-3373-3820-0.ch004

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Abstract

Compensation strategy is a critical element in the management of an organization's human resources. It defines the approach and structure that a company adopts in rewarding its employees for their contributions and performance. Compensation goes beyond just salary; it encompasses a wide array of monetary and non-monetary rewards, such as bonuses, incentives, benefits, stock options, and recognition programs. A well-crafted compensation strategy aligns with an organization's business goals, supports its values and culture, and ensures that the organization remains competitive in attracting, retaining, and motivating top talent. At its core, compensation strategy serves several key purposes. First, it acts as a mechanism to attract skilled professionals to an organization. In competitive labor markets, especially in industries where talent is scarce, a strong compensation package can be the difference between securing a high-performing candidate and losing them to a competitor. Second, compensation plays a crucial role in employee retention.

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