Culture Based Strategic Compensation Management

Culture based Strategic Compensation Management: Culture plays a central role influencing various HR system and sub-systems in the organization. The effectiveness of the performance management depends on the organization’s culture. The consequences of impact of organization culture on performance managements can be felt in compensation management. Culture based compensation management refers to a culture of an organization that ingrains,  reinforces, echoes and motivates those behaviors, values and actions that are positive, constructive and meaningful; and tends to rewards the same. Originations with performance management driven compensation tends to comprise if an integrated performance management systems, high performing work system and practices, mentorship,. Counseling and feedback systems, high mapping and developing system and strategic career and succession management system.

Depending on the type of culture, strategic compensation management will differ from one origination to another. The following types of cultures:


  • Apathetic Culture: In apathetic cultures is no emphasis or [performance improvement. Seniority rules, play by the rule and procedure is extremely important is such organizations. These organizations are risk averse and non-competitive. Managers protect themselves from criticism and are concerned about job security. Promotions are slow and automatic and performances are rare. Strategic compensation management cannot exits in such cultures.
  • Paternalistic Culture: In paternalistic cultures, the focus is on people with less concern for performance. People feel trusted and believe they are treated fairly. Most of these organizations meet employee’s need such as day care; flex i-time etc. organization is hierarchical with an iron a velvet glove to protect themselves. Change is slow and often forced by outside influences and competition is minimal. Compensation is important but strategic compensation carries least priority in such cultures.
  • Demanding Culture: In demanding cultures, the focus is on efficiency, competition individual performance and job position. Individual performance drives compensation of employees. There is constant challenge to improve and they are highly competitive. Strategic compensation is highly valued in such cultures and constitutes an integral part of its competitive priority.
  • Involvement Culture: Core values are both people and performance. Originations with this culture are innovative, foster cooperation, risk taking and group performance improvement. People are nurtured constantly to improving performance. Goals are accomplished by involving people and are true learning organizations. Team orientated environments are believed to be most effective. Everyone is given stake in group incentive plan and stock ownership. In such cultures individual performance and team considerations carry equal weight age, and compensation strategy is oriented towards both fixed salary as well as incentives.    

HR-Professionals 12 Compensation 12


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