2. Linking Executive Compensation Strategy to Business Strategy

Defining strategy as “a plan of action intended to accomplish a
specific goal” the authors of this chapter present a detailed discussion
of both business strategy and compensation strategy; why the two
must be in synch and how most successful businesses have particularly
clear examples of both.The chapter also provides an interesting
overview of five of the major business strategy models, and how each
helps the CEO and other senior executives to make informed,
strategic decisions about the business.

A model for determining compensation strategy is then
presented, with ten specific parameters (design elements) to guide
compensation plan design and administration. These parameters
cover such topics as pay positioning, pay/performance leverage,
comparator group, performance measures and metrics, compensation
risk, time horizon, and more.

Business strategy and compensation strategy are interesting, but
the magic occurs when the two interrelate and support each other to
effectively drive the business. Sensing that many companies may have
at least partial misalignment between the two, the authors provide
two easy-to-follow models that will be helpful to most compensation
practitioners—a five question model for determining whether or not
business strategy and compensation strategy are aligned, and a five
step process for creating stronger linkage/alignment between the two
strategies as needed. —Editors



In stock and shipping next business day. U.S. residents can order the
542 page casebound book, including templates and sample documents on CD,
direct from the Publisher for $99.95. The book can also be ordered through any
retail store by the title Executive Compensation: The Professional's Guide to Current
Issues & Practices or by its ISBN number: 1-893190-25-0.