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Compensation Strategy

Step 1
Individually, identify and research the compensation strategies for two companies. For each company selected, discuss the following: (A) evaluate the compensation strategies for executives of each company and (B) evaluate compensation strategies for sales forces and contingent workers of each company. You may choose to pick one company for research on executive compensation strategies and one company on sales forces and contingent workers compensation. There also may be articles that cover all three groups.

Step 2
Based upon the information gathered from the work done in Step 1, prepare an analysis that synthesizes the key findings. Using the companies researched: (A) analyze the ethical issues in compensation management, (B) examine internal controls utilized in compensation management, and (C) discuss how the compensation of executives, sales forces, and contingent workers relates to the Fair Labor Standards Act and prevailing wage laws.

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The response addresses the queries posted in 1938 words with references.

//Prior to discuss the market compensation strategies for the companies, it is better to understand the concept of the compensation strategy. The compensation strategies are analyzed in two different aspects for two different companies. In the first step, the strategies are evaluated for executives and sales forces & contingent workers.//

Compensation Strategy


Employee compensation is a vital part of human resource management. Wages, salaries and other forms of employee's compensation constitute a very large component of operating cost. Salary and wages of the employees are one of the biggest factors that affect industrial relations. By means of the following paper I am going to summarize the various parameters that are associated with the compensation strategies of Starbucks and Wal-Mart.

//For the first step of evaluating of the compensation strategy, the two selected companies are Wal-Mart and Starbucks//

Step 1

Evaluation of Compensation Strategy of Starbuck for Executives:

Starbucks is the United States based MNC engaged in coffee and coffeehouse chain business. It is one of the world's largest coffeehouse companies. It has expanded its business in about 44 countries with nearly 15,011 stores. Currently, more than 172,000 employees are working in the company (About Company, 2008).

The compensation policy of executives in the Star-Bucks is very rational. It targets the yearly cash components to be delivered to the company executives. Its policy for compensating the executives is based on pre specified and crystal clear rules. There is a provision in the company to review the basic salary of the executives on the annual basis and when the promotion of the employee is due. The basic salary is also reviewed at the time of the changes in responsibilities given to the employees. Therefore, we can say that its policies are very much balanced and also effective. The company's balanced approach towards the executive compensation can also be judged from its steps like increasing the salary of its executives on the basis of level of responsibility, performance of an individual, pay level of all the employees to be considered for this purpose and paying bonus on the basis of the percentage of base salary.

The company also gives its employees equal opportunities to earn more incentives and bonus while performing their regular responsibilities. The impact of theses compensation policies is that the executives of the company are motivated to perform well and fulfill the objectives of the company so that their objectives of earning more and getting complete job satisfaction is achieved. Under the long term incentive compensation strategy of the company, it provides the executives awards in the form of stock option plans. This policy of the company reflects its views that each of its executives, if given the ownership in the company, would prove very beneficial for the purposes of incentive, retention and alignment with shareholders (Compensation and Management Development Committee Report on Executive Compensation, 2007).

The company also provides various personal benefits to the executive officers and the partners like ...

Solution Summary

1843 Words, APA Format