MG302 ASSIGNMENT 2 S11040806 MINAL MONIKA PRASAD SEMESTER 1 2023

Remuneration is the overall pay earned by an employee, it not only compromises on the base salary
income but all the other benefits and employee is getting example bonus, commission, increment,
overtime, or any other kind of financial benefit from the organization. Aligning remuneration practices
with the accomplishment of the organization's strategic business objectives is a component of strategic
compensation. The organization's strategic business objectives should inform its compensation policies
and practices because they determine the types of employees that should be recruited and retained as
well as the organization's organizational structure. Companies can create initiatives to realize their vision
by using strategic objectives. You will be better equipped to support and have a greater impact on
strategic objectives through your contributions to the workplace if you are aware of what they are and
why they are crucial. (JAMES, n.d.)

To begin with, A company's remuneration practices and policies can, to start, encourage employee
behavior that advances its strategic business goals. Research demonstrates that businesses looking to
gain an edge over rivals use compensation strategies that support, facilitate, and reward the desired
employee behaviors. Leading corporations like ANZ, BHP Billiton, Foster's, Macquarie Bank, and Westpac
have matched executive compensation to shareholder-based metrics. Foster's, for instance, coordinates
management bonuses with the interests of shareholders, the accomplishment of corporate goals, and
company profitability. Therefore, compensation may be a key tool for encouraging higher levels of job
performance and boosting organizational effectiveness. (Sabiroh Md Sabri, 2021)

Despite the fact that employers and employees have various motivations for creating one, a good pay
plan is meant to assist the firm in achieving its strategic goals and objectives. Unfortunately, many firms
fail to consider their strategic goals while creating their pay approach. For instance, many organizations
have as a strategic goal luring and retaining elite personnel, especially in industries with tight labor
markets.

Therefore, creating a compensation strategy that doesn't pay beyond market rates won't assist the
business in achieving its strategic goal. The need to attract and retain talented employees, promote and
reward appropriate workplace behavior that supports a high-performing organizational culture, ensure
that compensation is equitable and fair for all employees across the organization, and motivate
employees to work harder are additional employer-driven factors for developing a remuneration
strategy. One of the most significant challenges in creating a successful and profitable company is
attracting and keeping talented employees. This is a consensus among many executives. claim. Creating
a solid and well-defined compensation strategy can help your business recruit top talent. The market's
awareness of a company's brand can also be raised by organizational strategies to draw in and keep top
talent by compensating employees above market rates. This is especially true for professional services
such as legal, accounting, and consulting services, where affiliates may be asked to pay more than their
current company. Clients follow talent as a result of subsequent transfers to new companies and the
increased compensation that comes with it.

You can create a positive company culture that promotes ethical behavior and customer satisfaction by
using reward strategies that reward good behavior. Although not the only component of corporate
culture, compensation strategy is a crucial one. However, establishing a solid corporate culture can be
done by starting with compensation. It should be emphasized once more that an organization's
compensation strategy needs to be directly tied to its strategic objectives. For instance, offering financial
services in an ethical and legal manner might be an organization's strategic goal. Setting expectations for
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how goals will be met in this situation is just as crucial to the reward strategy as motivating goal
achievement. For example, as an Intermediate Staff at USP, we fill in staff reviews to get 3 years contract
renewal, or bonus or increment. Also once we had Job Evaluation filled to check if the Job Description
and work we do match with its pay.

From the viewpoint of the employee, the development of a compensation strategy can be advantageous
because: It should allow for fair treatment of the employee in comparison to their peers across the
organization; It will enable the employee to evaluate their value to the organization's strategic
objectives and compensate them accordingly; It motivates management and staff to convene and carry
out performance evaluations, which should pinpoint and enhance employee performance.

The development and implementation of a successful compensation plan is a key function of the HR
department. To put the compensation strategy into practice, the HR team must develop a compensation
strategy and any accompanying policies that are in line with the firm's strategic goals, encourage the
right behaviors to support the organization's values, and boost productivity. To put the compensation
strategy into practice, the HR team must advertise and raise awareness of the compensation plan,
compare the compensation plan to other compensation plans on the market, react to pay-related
concerns raised by employees, and submit relevant reports to the Board, Remuneration Committee, and
senior management.

A pay Committee oversees the organization's pay policy and other agreements. This is done by
supporting and advising the Board on matters relating to the remuneration plan, such as pay, bonuses,
incentives, and the Chief Executive Officer's compensation. In addition to overseeing the organization's
compensation plans, the Remuneration Committee's main responsibilities also include reviewing and
approving significant policies and procedures. Making sure that the organization's compensation
policies, procedures, and key performance indicators align with its objectives and fundamental
principles, as well as ensuring that employee compensation is in line with market rates and that any
differences are clearly justified.

The guiding principles for a company's compensation strategy are outlined in the compensation policy.
Strategic and organizational goals that have been set by the organization Objectives that the
organization hopes to accomplish through its compensation strategy are typically included in
compensation policies. For instance, you might want to create a strong risk culture by rewarding moral
and legal behavior. guidelines for deciding on compensation for the board and compensation committee
as well as the entire organization. In order for employees to understand how compensation is decided
upon and evaluated, compensation policies should be clearly stated throughout the organization.
Fairness and openness are essential components of a successful compensation strategy. Other types of
subpolicies or procedures, such as performance and salary review policies, performance policies, and
employee incentive plans, support the overall compensation policy in order to give the organization's
employees additional guidance as needed.

Once the primary governance structure for compensation has been established, the Remuneration
Committee and the HR division can start working on designing and implementing a strategic
remuneration framework throughout the business. After completing a number of essential steps, a
strategic remuneration framework must be put into place. .
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A crucial component of any compensation plan is the use of STIPs and LTIPs. The use of STIPs helps to
build a results-driven culture and increase employee engagement. Additionally, they are employed to
make performance compatible with short-term performance indicators. STIPs are frequently given to
employees as a monetary incentive when the critical indicators are met. LTIPs aim to improve
employees' long-term performance by providing rewards that are not linked to short-term success
indicators like the price of the company's stock. In contrast to STIP benefits, LTIP compensation is
frequently given in the form of retirement benefits or stock options.

Employing External Compensation Consultants A successful compensation strategy requires the use of
external compensation consultants for both development and implementation. Consultants in
compensation, in particular, can be educators, advisors, and influencers to boards and HR divisions. The
best use of external compensation consultants should be made by businesses by leveraging market
insights. The following methods for utilizing external consultants during the strategic compensation
process:Strategic Phase Work with the Compensation Committee and Human Resources team to create
appropriate compensation targets in line with the organizational strategic goals. Verify your incentive
plan's alignment with the strategic objectives of your organization by conducting an annual review. In
order to make sure that rewards are created to meet the strategic goals of the organization, facilitate
the development of STIPs and LTIPs. Comparing and contrasting pay with that of peers allows
administrative phases to gauge how competitively paid key management positions are in the market.
Give support for organizational job ranking.

In conclusion, in a setting where competition is escalating, a company's compensation strategy is

essential to luring and keeping employees as well as fostering a positive corporate culture and,
ultimately, achieving its strategic goals. must be applied. The strategic objectives of your business should
align with your compensation plan. The HR team is crucial in developing salary plans and disseminating
them across the organization. A successful compensation strategy aims to draw in the top talent on the
market, recognize and reward employees for appropriate behavior, and inspire staff to meet
organizational targets. The process of creating a compensation strategy differs from company to
company. However, it is crucial to have a compensation committee and a clearly stated compensation
policy. The organization's process for determining and reviewing compensation is overseen by the
Compensation Committee. A compensation policy should be communicated throughout the
organization and lay out the guiding principles for the compensation strategy. To align with strategic
goals and enhance employee performance, organizations should use her STIP and LTIP jointly.
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Bibliography
JAMES, M., n.d. What Is Remuneration? Here's What Counts as Employee Compensation. [Online]
Available at: https://www.investopedia.com/terms/r/remuneration.asp
[Accessed 27 April 2023].

Sabiroh Md Sabri, E. N. M. N. N. A. N., 2021. researchgate. [Online]

Available at:
https://www.researchgate.net/publication/348925746_The_Effects_of_Reward_System_on_Employee_
Performance
[Accessed 27 April 2023].