strategic compensation
Post on 25-Feb-2016
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1
StrategicCompensat
ion
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The ChallengeTo align the deployment of
human capital with company strategy
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Environmental Factors
AffectingPay Strategy
Sociocultural Forces Demographic Forces Technological Forces Economic Forces Legal and Political Forces
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Porter’s Five Forces Threat of new entrants to the market Bargaining power of the firm’s suppliers Bargaining power of the firm’s customers Threat of Substitute products Intensity of rivalry among competing Firms
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Rivalry Among Firms
Price competitionProduct Innovation
Product Differentiation
Threat of New Entrants
SuppliesBargainingPower
BuyersBargainingPower
Threat Of Substitutes
Porter’s Five ForcesModel of Competition
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Organizational Factors
AffectingPay Strategy Mission
Competitive Strategy Leadership Culture Organizational Demographics Labor Market Degree of globalization
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Task Environment
Labor Market Product Market Competition Stakeholder Demands Degree of globalization
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Components Of
Compensation Base Pay Merit Pay Variable Pay
Incentive Pay Pay At Risk Bonuses Gain sharing Profit sharing
Benefits
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Strategic HR Choices Options available in designing its
human resources systems Strategic to the extent they affect
firm performance favorably or unfavorably in the long run
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Strategic Approaches Market Life Cycle Competitive Strategy Miles and Snow
Topology
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Market Life-CycleCorporate Strategies
Start-up Growth Maturity Decline Turnaround
Model #1
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Start-Up Harnessing resources
Money People Facilities and Supplies Customers
Overcoming barriers to entry Building customer loyalty
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Growth Firms Aggressive growth Demand outstrips supply Evolution
Acquisitions, Mergers, Joint ventures
Willing to purchase and divest businesses
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Mature Stay with industry Market penetration Shake-out High product similarity Fight for survival
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Decline Cost Reduction Preserve/recoup Market share Internal efficiencies Divestment Niche Harvesting
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Turnaround Evaluation Cutting and pruning Building Nurturing
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Business Strategies
Overall cost leadership Innovation Quality enhancement
Combined strategy
Model #2
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Overall Price Leadership
Competitive advantage through lower costs. Financial/accounting driven. Sustained capital investment Low cost distribution system Tight cost control, detailed reports Structured organizations Products designed for ease of manufacturing
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Innovation Focus on the product or service uniqueness. Strong market ability Product engineering Basic research Corporate reputation for quality or technology Amenities to attract skilled labor, scientists, &
creative people
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Quality Focus on providing quality service that
specifically meets the needs of the customer
Philosophy of Quality Continuous Improvement Quality measurement through Statistical
Process Control Goal setting and monitoring Doing it right the first time
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CombinationAttempts to minimize costs by focusing on a specialized market slot with specialized pricing. Alternatively, focuses on cost reduction through quality workmanship
Illinois Tool Works -- Fasteners Gymboree -- creative activities for little kids
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Balancing Three Types
Of Equity
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Miles and Snow Topology
Defenders Prospectors Analyzers Reactors
Model #3
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Defenders Narrow Line of products Defend Market Position Against Anyone
Cigarette companies Coca Cola Intel
Model #3
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Prospectors New Market Opportunities Aggressive search out
new products Innovation and new
product development Examples
Amazon.com 3M Company
Model #3
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Analyzers One product in a stable market and one
product in a changing market
Examples Schering-Plough Corporation Stable drug Garamycin Mainly me-too copy drugs Interferon in new market
Model #3
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Reactors Major changes in environment Slow to Reactor
Examples Bethlehem Steel The Boeing Company
Model #3
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