Compensation Strategy: Determinants and Contingencies in High‐technology Organisations

Abstract

The challenge facing human resource/compensation professionals in the people‐intensive, high‐technology industry, will be the development of a model and strategy intended to respond to the specific needs of unique professionals engaged in high growth organisations. This article examines the complex purposes of compensation, including the eight factors contributing to the determination of compensation levels, while considering constraints and contingencies. Job‐based evaluation and person‐based systems will be examined together with individual and group incentive plans as they impact upon growth cycles of high‐tech firms. The innovative nature of high‐technology organisations can be directly linked to compensation strategies for management. These high growth firms utilise a most unique compensation approach which is fundamentally different from normative organisations. They: (1) use annual incentives, but emphasise the longer term; (2) emphasise stock rather than long‐term cash plans; (3) use stock options where the manager benefits only if stock prices increase; (4) use a much larger proportion of stock than typical firms provide; and (5) encourage much wider use of stock among a broad employee group. Compensation occupies as significant a niche as articulate strategies and leading edge innovativeness, for high‐technology organisations.

Citation

Appelbaum, S.H. (1991), "Compensation Strategy: Determinants and Contingencies in High‐technology Organisations", International Journal of Manpower, Vol. 12 No. 8, pp. 22-30. https://doi.org/10.1108/01437729110007062