When a company is just starting out, a formal compensation program is usually fairly low on its lists of priorities. Eventually, however, such a program becomes essential. Administered effectively, human resources (HR) and compensation development both become an integral part of an organization's business strategy. Integrating compensation into a business strategy can be complicated. HR managers sometimes pay little attention to their company's business strategy, and the result is a compensation policy that is geared toward meeting unrealistic goals. Conversely, non-compensation professional often fail to seize the opportunity to link pay with financial and marketing results.
Compensation programs have emerged as a vital link between an organization's business strategy and business results. A reward strategy should be designed to complement the organization's market position and to help it either maintain what it has achieved or obtain new goals.
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