Compensation represents the rewards employees receive for performing their jobs. These rewards are either:

• Intrinsic: intrinsic compensation represents employees’ critical psychological states that result from performing their jobs
• Extrinsic: extrinsic compensation includes both monetary and nonmonetary rewards

What Is Strategic Compensation?

Strategic Compensation refers to the design and implementation of compensation systems to reinforce the objectives of both HR strategies and competitive business strategies.

Competitive Business Strategy:

ØThe planned use of company resources

• Financial capital
• Equipment capital
• Human capital

Ø Multiple years of time span

Ø Competitive strategy choices

• Lowest cost strategy
• Differentiation strategy