Rewards and Compensation Strategy: Issues and Challenges Analysis

This essay examines the challenges companies face in developing and implementing effective rewards and compensation strategies, particularly in the context of Saudi Arabian companies. It explores the difficulties in aligning reward strategies with business goals, motivating employees, and linking performance with compensation. The essay highlights issues such as retaining core employees, the effectiveness of performance-related pay, and the importance of considering workforce culture and mindset. It emphasizes the role of HR managers in attracting, retaining, and motivating employees through various reward systems, including those based on skills, competencies, and performance. The analysis points out the significance of continuous learning, competitive advantage, and the use of performance management systems to enhance employee capability and organizational success. The essay concludes by suggesting that Saudi companies can address these challenges by implementing skill-based pay and performance evaluations to maintain employee morale and motivation.

RUNNNG HEAD: REWARDS AND COMPENSATION STRATEGY 0
2020
Rewards and Compensation Strategy
Student’s Details-

REWARDS AND COMPENSATION STRATEGY 1
Rewards and Compensation Strategy: Issues and
Challenges
The companies face challenges in the making of rewards and compensation strategy and
linking it with the business strategy. Here, the essay is based on the issues and challenges raised
in the paper “Rewards and Compensation Strategy: Issues and Challenges” which can be
relevant to the Saudi companies (Khan, 2000).
The companies find it difficult to keep the employees motivated through the aligning of
the rewards strategy with the business goals. This is core activity for the retaining of the
employees and making them satisfied with the restructuring and downsizing for the retaining of
the good employees. Moreover, Saudi companies face issues in linking of the performance
strategy with the reward strategy. The companies account for new ways for the retaining the core
employees which is often related to performance related pay and gain sharing plans which are
being used in the recent times. However, rewards and compensation strategy is an important HR
strategy in which the HR managers attract, retain and motivate their employees for the retaining
of the core employees. The companies link performance-based strategy with the business as the
quality of their performance will lead to the productivity of the company. The companies provide
rewards to the employees in various ways. The employees are rewards are related with the
operational excellence, product leadership and the primacy of customer intimacy which can
certainly lead to the success of the company.
Besides, the challenges can also be observed with the relationship with the strategic
choices and the reward and compensation strategy which depends upon the culture and the
mindset of the workforce. This can articulate the employee’s behavior through the adoption of a

REWARDS AND COMPENSATION STRATEGY 2
mix of reward strategy. Moreover, issues highlighted are relevant with the Saudi companies in
which the compensation strategy is the key element for the companies for the retaining of the
employees through the exploitation of the human resources. The rewards and the compensation
strategy is also linked with the skills and competencies of the employees in which the companies
develop the pay structure which later adds to the human resource programs. However, the
strategy makes sure the continuous learning of the employees which is key to the organizational
success. This certainly helps the companies to get the rewards for the additional skills and
competencies. Also, the companies are getting competitive advantage through meeting the needs
of competitive marketplace and leading to higher profits. The reward strategy can get the highest
level of competence which can be used for the acquiring of organizational capability. The use of
the performance management system is the specific way of employee’s capability and making
the employee motivated through the facilitation of various kinds of incentives.
Conclusively, it can be said that there are challenges for the HR managers in the reward
strategy. Moreover, Saudi companies can face the issues and can manage them with facilitation
of skill base pay through the performance evaluation for sustaining morale and motivation of the
employees.

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References
Khan, S. (2000). Reward and compensation strategy: issues and Challenges. Management and
Change, 4, 91-117.