DISCUSSION BOARD 1 2
Discussion Board
Please identify one strategic element of compensation and benefits. Discuss it in
depth.
To entice and retain valuable employees, a business or organization must develop a
strategic compensation strategy. The goal behind strategic compensation starts with a
competitive business strategy or “the planned use of company resources—financial capital,
equipment capital, and human capital—to promote and sustain competitive advantage”
(Martocchio, 2020, p. 4). The importance of strategic compensation is how it allows the
organization to be successful and stay competitive. Organizations must be able to keep their
budget for employees under control by placing the jobs into the correct salary pay grades.
Strategic compensation also sets the company apart in the job market either in an appealing or,
unfortunately, a negative connotation can occur if not properly managed and researched.
Companies should ensure their salaries are competitive with what is paid in the open market with
similar jobs. Market analysis will minimize the risk of high-quality employees leaving and
finding positions with other companies offering more money.
Human capital theory is a relatively new idea that theorizes that humans are critical to the
long-term growth and advancement of society. “Individual and collective human capital is
comprised of the information, skills, attitudes, and talents possessed by people, as well as the
social and cultural endowments possessed by a group, including the ability to discover, invent,
innovate, and be innovative” (Joga & Gavrila, 2021, p. 519). Employees can obtain the skills
over time with formal education and training that also includes on-the-job experience. As
employees acquire these new skill sets, it will enable them to be more productive with their
workload. This theory is critical because it promotes economic growth, and organizations need to
DISCUSSION BOARD 1 3
be successful. Benefits from the investment in people in terms of education result in rapid
economic growth, both for personal and professional reasons. Gaining education assists in
finding work, and “increasing labor productivity enables technological innovation, raises the
return on capital, and makes economic expansion more sustainable” (Joga & Gavrila, 2021, p.
522). A recent study concluded that business human capital investment should increase in
technology and remote training, which were highlighted by the COVID-19 pandemic of 2020
(Joga & Gavrila, 2021, p. 526).
Financial capital or cash rewards is one way to compensate employees for their
contributions to a business and can be separated into extrinsic and intrinsic compensation.
Businesses usually focus on the tangible, monetary, or financial aspect, which is extrinsic. These
are in the “form of salary, bonus, company car, or promotion” (Ilie Popa Georgiana-Florina et al.,
2022, p. 1). They focus on seniority, performance, and skills, which relate to promotions, social
status, pay raises, merit increases, vacations, and benefits (Martocchio, 2020). These types of
rewards motivate employees to produce quality work and earn material compensation (Ilie Popa
Georgiana-Florina et al., 2022, p. 1). Biblically speaking, paying people fairly for their work is
described in 1 Timothy 5:18, where the Scripture says, “You shall not muzzle an ox when it
treads out the grain,” and, “The laborer deserves his wages” (King James Bible, 1769/2017).
DISCUSSION BOARD 1 4
References
Joga, F. E., & Gavrilă, R. (2021). Developing the Concept of Human Capital by Highlighting the
Benefits for the Education System.Revista De Management Comparat
International,22(4), 519-526. https://doi.org/10.24818/RMCI.2021.4.519
Ilie Popa Georgiana-Florina, Tanase, V. A., & Bacanoiu, V. C. (2022). The Influence of Intrinsic
and Extrinsic Motivation for Employee Compensation.Academy of Marketing Studies
Journal,26(5), 1-8.
https://go.openathens.net/redirector/liberty.edu?url=https://www.proquest.com/scholarly-
journals/influence-intrinsic-extrinsic-motivation-employee/docview/2719448741/se-
2
King James Bible. (2017). Cambridge University Press. (Original work published 1769) King
James Bible. (2017).
Martocchio,JJ.JJ. (2020).JStrategic compensation: A human resource management
approachJ(10thJed.). Pearson.
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