Main Content
Lesson 1: Strategic Compensation as a Component of HR Systems
Lesson 1 Overview
In this lesson, you will learn the definition of compensation and its place in the system of practices that defines it as a human resource management function. It is important to understand that the design and implementation of compensation practices can enhance or hinder a company’s attainment of its business goals (competitive strategy). Strategic compensation describes the relationship between compensation practices and competitive strategy. Promoting compensation’s value as a strategic tool requires that compensation professionals work with company leadership to ensure alignment between compensation system design and company strategies. You also will learn about the building blocks and structural elements of strategic compensation systems; pay and employee benefits are examples of building blocks, and both pay grades and pay ranges are examples of structural elements. Finally, you will learn how the compensation function fits within a company’s structure and discuss the stakeholders of the compensation systems (e.g., employees).
Learning Objectives
After successfully completing this lesson, you should be able to do the following:
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Define strategic compensation.
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Summarize the role of compensation as a strategic business partner.
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Explain strategic compensation decisions.
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Identify and discuss the building blocks and structural elements of strategic compensation systems.
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Describe the fit of the compensation function in organizations.
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Identify the stakeholders of the compensation function and summarize their stakes in the work that compensation professionals perform.
Readings and Activities
By the end of this lesson, make sure you have completed the readings and activities found in Lesson 1 of the Course Schedule.