FINC 4534-NOTES 2 - NOTES Step 4 focuses on reassessing and...

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NOTES Step 4 focuses on reassessing and realigning as conditions and strategy changes; it closes the loop. Thus, periodic reassessment is needed to continuously learn, adapt, and improve. The results from using the pay system need to be assessed against the objectives that the company is trying to achieve. Source Of Competitive Advantage: Three Tests A. Three tests determine whether a pay strategy is a source of competitive advantage: 1. Is it aligned? Alignment of the pay strategy includes three aspects: (1) alignment with the business strategy; (2) aligned externally with the economic and sociopolitical conditions; and (3) aligned internally with the overall HR system. a.a. Alignment is probably the easiest test to pass. 2. Does it differentiate? Some people believe that the only thing that really matter about a strategy is how it is different from everyone else’s. a.a. If a pay system is relatively simple for any competitor to copy, then how can it possibly be a source of competitive advantage?
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