Can Pay Be Strategic?

Abstract

Fulfilling one of the key aims of this study, the findings present a grounded perspective on strategic pay in practice, one that in many respects is in stark contrast to the prescriptions of standard theory. Pay within the case study companies is universally valued as a managerial tool for securing competitive advantage, through enhanced company performance. To that end, the case study companies all aspire to use pay strategically. All firms deploy pay practices that would be characterized as both strategic and best practice by conventional standards. However, all of the case study companies have encountered significant difficulties when attempting to use strategic pay systems, with the result that they were perceived often as ineffectual and, in operational terms, nonstrategic. A key finding of the study is a gap, in a significant number of the case study companies, between what they aspire to do strategically, what they intend as policy and what they achieve operationally as pay practice. As a result, pay systems do not necessarily do what they are supposed to do. Why?