Final answer:
A compensation scorecard aligns employee efforts and incurred costs with company strategy, increasing engagement and establishing clear connections between roles, efforts, and overall company success.
Step-by-step explanation:
Using a compensation scorecard in aligning compensation with strategy benefits a company in numerous ways. First and foremost, it ensures compensation structures align with the company's strategic goals, contributing to the overall mission and priorities. The scorecard acts as a holistic tool to systematically link performance metrics with appropriate compensation, ensuring that the effort expended by employees and the costs they incur are fairly compensated. This aids in motivating employees to achieve strategic objectives.
It also increases transparency within the company, helping employees understand how their roles and compensation fit into the broader company strategy. Employees are more engaged when they see how their work directly contributes to the success of the company. An organizational chart can further support this clarity by showing employee roles and reporting structures - providing context for how individual contributions impact the organization. This can lead to better teamwork and collaboration as individuals understand where they and their co-workers fit in the larger company framework.
Lastly, by tying rewards to performance metrics that reflect a company's strategic objectives, a compensation scorecard can promote a culture of meritocracy. This aligns with the concept that people should be rewarded according to the effort they expend and the compensation they should receive, which in turn, can improve overall company performance as employees strive to meet and excel at these metrics.