Abstract
When organizations design compensation programs, they often resort to implementing an offthe- shelf or “flavor of the month” design rather than tailoring their programs to fit their organizations’ specific needs. Because the most effective compensation programs align reward systems with business strategy, organizational structure and organizational culture, it makes sense to take the time and effort to customize reward programs. This article examines the different design choices that are appropriate for any combination of business strategy (defender or prospector), organizational structure (mechanistic or organic) and organizational culture (traditional or involvement). The article illustrates these combinations with case studies and recommendations for reward system design and implementation practices.
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