strategic pay

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Is a term coined by management writer, Edward E. Lawler III, to express the belief that the selection of reward systems should be driven explicitly by the need to reinforce business strategy. Strategic pay can therefore be contrasted with reward management based on custom, universal models of best practice, legal regulation, or the demands of employees as expressed through trade unions. It is based on the conviction that business performance is the only appropriate standard against which reward practice should be judged. ‘strategic pay’ is a prescriptive concept and leads to the search for incentive and other tools that can reinforce patterns of worker behaviour (innovation, customer responsiveness, and high output) that allow business strategy to be implemented successfully within the enterprise. [See new pay.]

Subjects: Human Resource Management.

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