engleski

The Role of Compensation Strategy in Achieving Firm Performance Outcomes: A Managerial Perspective

Linking compensation to firm’s strategy is an important requirement for any compensation system. The underlying premise is that the higher the fit, organizations will be able to reach higher performance and competitiveness. This paper examined the level of compensation strategy and policy formalization in a post-transition European country and its role in driving firm competitiveness. Primary research was conducted among the population of Croatian companies that employ more than 100 employees. The research is based on the sample of managers from 61 company. Research results showed that slightly more than a half of companies have a formalized compensation strategy whose primary objective is to improve employee performance. There are differences in the level of management and expert engagement as well as in relative productivity compared to competitors depending upon the level of compensation strategy formalization. Still, only 36.1% of managers find that compensation strategy can have an impact on competitive advantage.

compensation strategy, compensation policy, competitive advantage, firm performance

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