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Aligning Compensation with Business Cycle:Exploring Economics of HR


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1 Jaipuria Institute of Management, Noida, Uttar Pradesh, India
     

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In current times of globalization, changes in business cycle and economic variables are very rapid which result in change in organization strategy as a response to change in business environment. Understanding the behavior of costs and their relevance to specific decisions is of vital importance to organizations. One of the key factors in the organizational success is human factor and is also has cost associated in form of compensation. Market oriented economies cannot escape fluctuations in economic activity; therefore it is important for success of organization that their compensation and reward strategy be aligned with the changes in business cycle. The primary aim of the paper is to study and analyze the impact of business cycles on compensation in terms of re-formulating compensation strategies during different phases of economic cycles as combination of variable and fixed cost in compensation. In this paper attempt has also been made to identify the components of compensation during phases of economic cycles and thus creating a conceptual framework for economics of compensation.

Keywords

Business Cycle, Compensation, Economics of HR, Fixed Cost, Variable Cost.
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  • Aligning Compensation with Business Cycle:Exploring Economics of HR

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Authors

Vranda Jain
Jaipuria Institute of Management, Noida, Uttar Pradesh, India
Swati Agrawal
Jaipuria Institute of Management, Noida, Uttar Pradesh, India

Abstract


In current times of globalization, changes in business cycle and economic variables are very rapid which result in change in organization strategy as a response to change in business environment. Understanding the behavior of costs and their relevance to specific decisions is of vital importance to organizations. One of the key factors in the organizational success is human factor and is also has cost associated in form of compensation. Market oriented economies cannot escape fluctuations in economic activity; therefore it is important for success of organization that their compensation and reward strategy be aligned with the changes in business cycle. The primary aim of the paper is to study and analyze the impact of business cycles on compensation in terms of re-formulating compensation strategies during different phases of economic cycles as combination of variable and fixed cost in compensation. In this paper attempt has also been made to identify the components of compensation during phases of economic cycles and thus creating a conceptual framework for economics of compensation.

Keywords


Business Cycle, Compensation, Economics of HR, Fixed Cost, Variable Cost.

References