Stakeholders of the Compensation System

HR professionals, including those in the compensation area, provide services to stakeholders within and outside the company. The primary stakeholders include:

• Employees
• Line managers
• Executives
• Unions
• U.S. government

Compensation professionals’ work must keep stakeholder interests in mind; you could say that there is good news and bad news about satisfying their objectives. The good news is that labor unions and employees expect to be paid fairly for the work they perform and receive cost-of-living increases that guard against rising inflation. The bad news is that some stakeholder expectations are in conflict. For example, most executives prefer to avoid a higher overtime pay rate; however, the U.S. government's Fair Labor Standards Act (see Chapter 2) requires companies to pay a higher rate when certain criteria are met (for instance, when certain employees work more than 40 hours in a seven-day period).

The textbook discusses the listed stakeholders and the role of compensation professionals in balancing competing interests.