[Research on the matching of corporate compensation strategy and competitive strategy] Three major strategies of competitive strategy

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Research on the Matching of Corporate Compensation Strategy and Competitive Strategy

Gomez Mejia, an American human resources management expert, first introduced the concept of "matching" into the field of compensation strategy research in 1987. He believed that the theoretical basis of compensation strategy is contingency theory; that is, compensation strategy should be based on changes in the environment and changes in corporate strategy. change. In the existing research on the matching of compensation strategies and related strategies, the focus should be on the matching of compensation strategies and corporate business strategies. However, there is still a lack of in-depth discussion on the matching issue with the enterprise's competitive strategy. The competitive strategy is only included in the business strategy for a brief matching overview, and the relationship between the compensation strategy and the competitive strategy, the matching principles and how to match are not analyzed in depth. .

In a fiercely competitive market environment, constructing a compensation strategy that matches the competitive strategy is the key to achieving corporate business strategic goals and enhancing corporate competitiveness. This article attempts to deeply analyze the relationship and matching principles between compensation strategy and competitive strategy, and explore how companies should formulate compensation strategies under different competitive strategies to guide the scientific matching of the two.

1. Definition of compensation strategy

Compensation strategy is a series of compensation options formulated by corporate managers under the guidance of business strategic goals to help companies gain and maintain competitive advantages. Compensation strategy is generally measured from three dimensions: compensation determination standards, compensation structure and compensation management system. Salary determination standards refer to the basis for determining the level of salary. Position, skills, qualifications, performance and market conditions may all be the basis for determining salary. Salary structure refers to the various components of salary and their proportions. It usually refers to the proportion between fixed salary and variable salary, short-term salary and long-term salary, non-economic salary and economic salary. Salary system management refers to the behavioral methods and decision-making standards for formulating and adjusting the salary system, including the degree of authorization, employee participation methods, internal and external orientation of salary, salary grade status, salary payment methods, and the frequency of adjustment of the salary system. The choice of compensation strategy depends on the company's internal and external environment and its own strategic vision. Issue 1 of the year·

□Deng Xiangnan, Xie Chaojie, Cai Yue

The proportion of remuneration linked to responsibilities is also relatively high.

2. Compensation strategy and competitive strategy

Secondly, different competitive strategies determine the core interaction mechanism of the enterprise

Competitive capabilities and core human resources , will also affect the design of compensation strategy. According to the requirements of corporate strategic planning 1. The intermediary hub role of employee behavior, the value of employees at all levels within the enterprise is divided. If an enterprise wants to determine the core human resources of the enterprise and survive in the fierce market competition, it needs to have a correct competitive strategy. Let’s design special incentive compensation for enterprises to inspire core employees to guide the industry forward. However, the success of the enterprise is motivated and creative. Third, corporate success not only depends on the competitive strategy direction of the company, but also depends on the direction and focus of the company's competitive strategy. For example, whether efforts to expand market share can be effectively implemented. Employees are the core of an enterprise, and motivating sales personnel to expand the market is the carrier of execution. Their behavior determines the key to enterprise execution. At this time, the salary incentives for sales personnel are the effect of execution, which in turn determines the focus of the company's competitive salary design. ; However, it emphasizes the effect of product innovation strategy implementation. However, organizational goals and individual enterprises will encourage technical personnel to pioneer and innovate, and human goals are often different. As a result, R&D and technical personnel become the focus of salary incentives for individual employees, and their behavior cannot be consistent with the goals expected by the company. Finally, the differences in corporate competitive strategies require companies to use various incentive methods, which will also lead to the design of compensation strategies and compensation systems to guide employees' personal behaviors and promote differences in individual goals. As the company's competitive strategy changes, the goals and organizational goals tend to be consistent, and ultimately the company's compensation strategy will be adjusted accordingly and the company's competitive strategy will change.

Move.

Salary is the most direct and effective way of motivating employees. 3. Salary strategy supports competitive strategy. It is an important means for enterprises to motivate employees. Corporate competitive strategy drives the salary strategy. Under the requirements of the competitive strategy, the enterprise determines the specific content of the salary incentive, and at the same time, determines the corresponding salary strategy. The salary strategy based on the salary strategy can help and guide the enterprise through planning and building a scientific and reasonable salary system

Make effective use of internal and external resources to strengthen and standardize employees' behavior to guide their behavior so that their behavior conforms to corporate behavior, forming effective support for competitive strategies and achieving expected goals. Through the rationalization of employee behavior, it promotes the realization of corporate competitive strategies.

Align employees’ personal goals with corporate goals, and the company ultimately realizes its competitive strategy by making efficient compensation decisions. Therefore, the three systems can not only help enterprises effectively utilize the relationships between users as shown in Figure 1.

Labor costs, maintain cost competitiveness, and 2. The drive of competitive strategy on salary strategy can also promote the effective combination of labor and production materials. First, due to the formulation and cooperation of competitive strategies, a good Economic benefits form the unique competitive advantages of employees at different levels of the enterprise during the implementation process. By designing a compensation system that is competitive in terms of ability, quality, and job functions, if an enterprise can attract and retain colleagues, there will inevitably be differences in their salaries. Organize the core talents that the enterprise needs and maintain the core talents of the enterprise. The higher the level of personnel, the more competitive they are in their ability requirements. To ensure that the enterprise's competitive strategy is high, the greater the responsibilities they should bear, which is in line with the strategy.

Smooth implementation; by designing a fair stratification

Supporting role

Figure 1?

Driving role

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Similar compensation plans help companies effectively motivate employees, promote employee behavior to be consistent with corporate goals, and ensure the realization of corporate competitive strategies. In addition, the compensation strategy also provides a strong talent guarantee for the smooth realization of the company's competitive strategy by coordinating with other strategies in the human resource management strategy, such as recruitment, training, performance appraisal and other strategies.

3. Principles of matching compensation strategy and competitive strategy

1. Dynamic matching principle

The internal and external environment of the enterprise determines the choice of the enterprise's competitive strategy. Therefore, changes in the environment will inevitably lead to changes in competitive strategies, and compensation strategies must also be adjusted accordingly to achieve dynamic matching between compensation strategies and competitive strategies. The macro environment determines the formulation of corporate business strategies. The stability of the political situation, the trend of economic development, and the soundness of legal policies all directly affect the choice of corporate business strategies and the formulation of compensation strategies. In addition, enterprises are at different stages of growth, and their corresponding business strategies and competitive strategies are also different. Remuneration strategies need to be adjusted accordingly to support the growth of the enterprise.

For example: When an enterprise is in the growth stage, its business competition strategy is to develop marketing channels, increase market share, and enhance brand awareness. Therefore, the external competitiveness of salary is emphasized in the salary design to attract More outstanding talents will meet the needs of business development. When an enterprise develops to a mature stage, it has sufficient cash income, its corporate culture is basically formed, and its management is relatively standardized. The enterprise's business competition strategy focuses on reducing costs to achieve cost leadership, while actively developing new technologies and opening up new markets. Therefore, The salary design emphasizes output efficiency, the payment structure is mainly fixed salary, short-term salary and economic salary, and the salary policy implements broadband management and extroverted salary.

2. The overall strategic goal-oriented principle The overall strategic goal is the ultimate goal that the company determines based on a certain external environment and its own capabilities. All sub-strategies of the company should be based on the overall strategic goal of the company. as the core. Enterprise competition strategy is a specific market competition strategy plan formulated under the guidance of the overall strategic goal and based on the situation faced by the enterprise in a specific development period and stage. It is a detailed process of promoting the overall strategic goal.

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The determination and implementation of the compensation strategy is to support the realization of the enterprise's competitive strategic goals, and therefore must be oriented towards the overall strategic goals of the enterprise. The compensation strategy must reflect the enterprise's development model and trend, run through and condense the corporate culture and business philosophy, and reflect the characteristics of the enterprise at different stages of development. Therefore, the salary strategy should determine the salary determination standards, salary structure and salary management system based on the overall development strategy of the enterprise. In this way, the compensation strategy can form an overall coordinated and interactive relationship with the company's overall strategic goals.

3. Reflect the principle of employee value

Employees, as the source of the company's core competitiveness, are the guarantee for realizing the company's competitive strategy and are also the targets of the compensation strategy. No matter how well the competitive strategy formulated by an enterprise meets environmental opportunities, if it cannot be conscientiously implemented by employees during execution, the enterprise's competitive advantage will not be realized. Therefore, the matching process of competitive strategy and compensation strategy must not only be coordinated with the overall strategic goals of the enterprise, but also need to consider the value demands of employees, allow employees to participate in the decision-making process of strategy, and try to coordinate employees' personal goals with corporate goals. Mobilize employees' enthusiasm and improve their execution ability.

4. Matching Analysis of Compensation Strategy and Competitive Strategy

Porter divides competitive strategies into three different types: cost leadership strategy, differentiation strategy and focused strategy. The three competitive strategies have different organizational characteristics. Therefore, the human resource management policies adopted are also different. Correspondingly, the compensation strategies also show great differences.

1. Compensation system of cost leadership strategy Enterprises that implement cost leadership strategy emphasize controlling costs to the lowest point, strictly control R&D, production, procurement, sales and other activities, while focusing on the continuous improvement of production efficiency and work Professional design. The organizational structure is mostly centralized, requiring employees to have appropriate abilities and stable performance within the designated work scope, and does not require innovation or breakthroughs. Since labor costs are strictly controlled and there are many short-term employees within the enterprise, individual short-term performance of employees must be used as the performance evaluation standard. Therefore, when designing the salary system, more attention should be paid to considering competitors' labor costs, emphasizing production efficiency, paying attention to system control and work requirements, etc.

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factors, and the salary structure should be fixed We mainly focus on salary and short-term salary, establish a cost-based salary determination system, and implement a centralized salary management system.

2. Compensation system of differentiation strategy Differentiation strategy is for enterprises to enhance competitiveness by making products or services unique in terms of quality, design, brand image, etc. Companies that adopt this strategy are generally in an environment of continuous growth and innovation, so they value the innovation and excellence of their employees, and the production technology is generally more complex; they have slightly higher requirements for employee creativity, and usually hire more employees in order to Improve corporate flexibility and reserve a variety of professional skills. Enterprises tend to establish long-term working relationships with employees to retain core talents, and invest a large proportion in employee training. Employee work is based on teamwork and focuses on team performance and individual long-term performance evaluation. In this context, corporate salary levels are based on prevailing levels in the labor market and will be higher than market levels, focusing on employee skills and performance. The salary structure emphasizes variable salary, long-term salary and internal fairness to achieve a decentralized salary management system.

3. Compensation system of concentration strategy

Concentration strategy refers to the enterprise producing and operating a single product or service, or directing products and services to specific geographical areas and specific customer groups. Enterprises focus on satisfying customer needs, which not only requires being able to meet customers' existing needs, but also being able to deeply explore customers' potential needs. The implementation of the centralized strategy is based on specialized technology and requires enterprises to maintain a lasting leading position in specific technical fields. Therefore, it requires extremely high levels of employee initiative and innovation. In terms of salary setting, companies usually pay technical staff efficiency pay that exceeds market salary levels to increase their work enthusiasm and stimulate their creativity, and to make technical staff have a high sense of loyalty to the company.

The salary structure focuses on the use of long-term compensation incentives such as stock options; at the same time, the company also provides a variety of rich social benefits and insurance and other non-economic compensation to attract and retain more outstanding technical personnel in society. Decentralized management is implemented in the salary management system, allowing employees to participate in the formulation of salary to better meet employee needs. Because the company is centered on customer satisfaction, the compensation system of such companies often pays bonuses based on customer evaluations of the services provided by employees. ■

(Author’s unit: School of Business Administration, Sichuan University)

·Issue 1, 2009·