Compensation strategy is an important term used in managing human resources of the company. These strategies are made to define the pay and benefits of the employees. It serves as a guide to manage the employee compensation Lotich (2017).
As per Carroll (2010), a compensation strategy is made in a way which stands in the comparison or above the competitors in the market. Wal- Mart, as all know is a leader in the super market industry. Also, it is a price leader. They are competing with other supermarket brands on the basis of price whereas other stores like Nordstrom do to compete on price. Both are different in terms of service, clients and different strategies like compensation strategy. Compensation strategies are made in order to reward their employees. The compensation strategy of Wal-Mart makes sure that the employees help the organisation in bringing the costs down because this is the only USP of the super market.
The compensation strategy of Wal-Mart includes Basic Pay which is made on the basis of hours worked and it is below the national average because low wages are paid as compared to industry’s national average. There are other benefits as well with the basic pay. These includes benefits like stock purchase plan, associate discounts, health insurance plans. There are incentives and this motivates workers to work more effectively (Thompson, 2017).
There are some factors which are to be considered while developing a compensation strategy. The factors which are considered by Wal-Mart while developing compensation strategy are:
Budget: Compensation budget is to be determined before developing compensation strategy. The compensation strategies of Wal-Mart are focussed on minimising the costs of the business. But with that the company also look for career development of the employees by paying them as per their performance and to the ones who supports the global performance of the company (Thompson, 2017).
Employee behaviour: the desirable attitudes and behaviours are to be identified before designing compensation strategy. The compensation schemes should be based on the performance of the employees.
Organisation growth and development and objectives: Growth of organisation determines the compensation strategy of employees and it is also based on the long term and short term gains of the organisation (Heng, 2017). Pay the individual team and its performance is to be considered.
Retaining right talent: Wal-Mart has to determine what rewards and pay could help them retaining the best talent in the organisation.
Local pay and reward practices: Local laws and practices are to be considered while developing the compensation strategies like taxes, labour markets or inflation (Fox & Riley, 2013).
Carroll, S 2010, ‘Developing a Competitive Compensation Strategy’, PayScale.
Fox, K & Riley, L 2013, ‘Making global compensation a reality at Wal-Mart’, HayGroup.
Heng, G 2017, ‘Developing a Compensation Strategy’. Retrieved from
Lotich, P 2017, ‘7 Keys To an Effective Compensation Strategy’, The Thriving Small Business.
Thompson, A 2017, ‘Walmart’s HRM: Compensation, Career Development’, Panmore Institute.