Alignment of Strategies, Structures and Reward Programs

A competitive business advantage is derived from the alignment of business strategies and reward programs. For compensation professionals, this is practically an axiom, similar to the saying “practice makes perfect” for the musician or the formula “E=MC 2” for physicists. The WorldatWork Total Rewards Model specifies that the business strategy, organization culture and HR strategy should be the primary determinants of reward strategy and program design to positively impact performance and results. Open any compensation textbook and you will find chapters dedicated to linking business strategy and reward programs. However, this compensation tenet contradicts our search for “best” reward practices, defined as reward programs and policies that are superior to other policies and programs regardless of the organization’s business or HR strategy, how the organization is structured, or other characteristics of the organization.