This document discusses how past pay decisions can create obstacles to future competitive advantages and outlines factors that shape compensation strategy. It notes that high labor costs, lack of downsizing or negotiation skills, and stringent government policies around benefits can reduce profits and increase costs. When determining compensation strategy, companies must consider internal alignment between jobs, external market rates, employee contributions, and management objectives around fairness, compliance, and efficiency. The document recommends making pay strategies more flexible and resilient by restructuring benefits, negotiating with governments, investing in automation, improving variable pay, engaging employees, and reducing costs through lean management practices.

3. Q1 How past pay decisions become
obstacles to future competitive
advantages?

4. OBSTACLES TO FUTURE
 Reducing Profit
 High labor cost
 Lack in downsizing decision
 Lack in negotiation & Persuasion skills of management
 Increasing Cost
 Lack of automation
 Lack in SCM process innovation
 Stringent Govt Policies
 Pension & Retirement benefits

5. Q2 Look at the factors that
shape a compensation
strategy?

6. FACTORS
EXTERNAL INTERNAL
OBJECTIVES
ALLIGNMENT ALLIGNMENT
EMPLOYEE
MANAGEMENT
CONTRIBUTION

7.  Objectives
 Fairness
 Compliance
 Efficiency
Internal Alignment
 Comparison among the jobs or skill level inside a single organization
 Pertains to the pay rates for both employees during equal work and for those doing
dissimilar work.
 Affects all three compensation objectives.
 External Alignment
 Refers to pay comparisons with competitors
 Twofold effect on objectives
- To ensure that pay is sufficient to attract and retain employees
- To control labour costs

8.  Employee Contribution
 How much emphasis should be there on paying for
performance ?
 Directly affects employee attitude and behaviour.
 Performance based pay affects fairness.
 Management
 Means ensuring right people get the right pay for achieving the right objectives
in the right way.

9. Q3 How to make a pay
strategy more flexible &
resilient?

10. Pay strategy
 Restructuring of :
- Pension’s policies
- Retirement benefits
- On the medical & health care expenses
 Negotiation with the govt.
- Regarding pension & retirement benefits to be
launched by govt at all the levels
- Equal and fair mandatory policies for all the firms

11.  Laying-off of non performers & acquiring fresh talented
people in the management
 Investment in R&D & Automation
 Re- engineering
- Focus on lean management
- Effective new tech implementation for SCM
 Improvement/changes in variable pay performance

12.  Reducing cost & increasing productivity by:
- LDP for workers
- Effective utilization of land
- Better sourcing of raw materials
 Improving employee’s engagement activities

13. Queries !!!

14. Group No. 2 :
SIVA PRIYA S
GARIMA KATIYAR
NIDHI JALAN
ANSHUL MISHRA
RESHIKA KAUR
KOHLI TUSHAR NEB