Business industry is marked by intense competition

Business industry is marked by intense competition. Companies are working hard to remain financially as well as technologically competitive. Being competitive in every term is essential for every company to remain profitable in the market. However, it has also been recognized that to stay competitive in terms of Human resources is essential. Organizations focus on handling human resources effectively so as to gain a competitive advantage from them. In this regard staff performance and level of motivation are important and unless the companies can focus on achieving a high level of motivation, they cannot get high level performance from them. Most important is to recognize the sources of motivation for the staff. For most people their compensation or the salaries they earn are an important source of motivation. It has been found through research that the better a company pays its staff the higher is its staff’s performance and the higher their level of motivation.

However, the last few years have been a period of economic turbulence and the companies have faced a lot of financial issues during this period. They were bound to make strategic budget cuts. While the companies were forced to downsize as well as cut costs in the other areas, the staff were also forced to work with small salaries. Compensation plays an important role in staff performance and also is important with regard to understanding the link between job and employee. Financial pressures have made companies make a hundred compromises and with them the staff too. These pressures have resulted in difficult conditions for the staff as well as the companies (HRexperts, n.d.).

Wages are a large part of employees’ income and they also influence their motivation greatly. Levels of employee compensation also have an important influence on employees’ attitudes and beliefs. Competitive salaries ensure that the workers face fewer pressures in their personal life. This in turn ensures that their motivation and job satisfaction are high. Moreover, it also ensures that the employees perform well and the productivity of the entire organization is high. However, it cannot be denied that the financial and economic pressures in this world have made it difficult for the companies to do business in this world (Desilva, n.d.).

Still, there are a number of strategies a company can adopt in this world to remain competitive. While being faced with economic pressures, it is also important that companies retain their talented and skilled employees. In such conditions the companies want a strategic payment system which can help them achieve their targets as well as retain their valuable resources and keep them satisfied and happy. Companies have various strategies top keep their human resources free from the pressures of economic turbulence. Companies have several strategies before them. The best alternative is to adopt a performance based payment system and link payment bonuses to the staff performance (Desilva, n.d.). Another strategy is to link it with organizational productivity and pay the employees based on the revenue. A third strategy is to provide other rewards than cash. Promotion and other rewards can be used to minimize the financial burden on companies. However, some companies have adopted the strategy of cutting costs in other areas so that they can afford higher salaries. It is also a good strategy to follow and companies can adopt the strategy to remain competitive without incurring losses.

In each of these cases it is important that adopting the specific payment strategy does not affect the organization negatively. In this regard making some systemic changes are important. There will be some planning required before formulating a strategy related to compensation. Planning is the first important step before adopting any new strategy. The first important step is to set a clear target. Another important step is to ensure that the targets are achievable. Setting achievable goals and clearly identifying the targets helps the company achieve its targets. Another crucial thing is to align the processes and procedures to the identified strategy. Moreover, the goals of the reward system have to be simple. Neither any complex nor elaborate reward systems would be easily achievable for the company. Apart from it an important thing is to have measurable goals.

While financial pressures have generally made it difficult for the companies to retain highly talented and skilled human resources, it has been even difficult for the staff to manage in turbulent times because of the strategic budget cuts affecting their pay-checks. Yet, there are ways in which the staff compensation can be managed and that too with the help of the right strategy. Linking pay to performance can be a good method for the companies trying to focus upon motivating staff and keeping their job satisfaction high.


Silva, S. D. (n.d.). AN INTRODUCTION TO PERFORMANCE AND SKILL-BASED PAY SYSTEMS. In ILO. Retrieved October 4, 2015, from

ELEMENTS OF SOUND BASE PAY ADMINISTRATION (n.d.). In HR Experts. Retrieved October 4, 2015, from

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