The compensation strategy is a general document about the vision, mission and strategy of compensation and benefits of the organization. Generally, the recession has no impact on the compensation strategy, but the organization has to make some adjustments.
The compensation strategy is always connected with the business strategy and the stage of the organizational development. The fast growing organization needs a different compensation strategy from the mature organization.
The recession can quickly change the status of the organization. The fast growing organization can change to the mature or declining organization and the compensation strategy has to reflect such a dramatic change.
The compensation strategy defines the general position of the organization on the pay market and the compensation strategy defines the proportion of the overall company costs allocated to the human capital of the organization.
The recession makes a huge pressure on the overall costs of the organization and the compensation strategy can easily change the position of the organization on the pay market. The recession has a positive impact that the compensation strategy does not have to be that aggressive.
The HRM Function has to monitor closely the development on the market and it has to watch for the signals in the change of the overall business strategy as the compensation strategy has to be adjusted as soon as possible.
The compensation strategy is quite costly document for many organizations and the HRM Function has to react proactively to many external changes. The compensation strategy cannot be fixed for many years, but it has to be clearly attached to the stage of the organizational development.
