Q1.

How should compensation systems align with the

contexts of an organization’s life cycle, industry, and
country consideration?
COMPENSATION ALIGNMENT BASED ON LIFE-CYCLE

• Start-up: Companies need high cash during this stage, and should rely
more on high variable pay
• Growth & Maturity: A higher proportion of fixed pay helps the
company maintain operating income during high revenue growth
• Decline: Sales revenue drops so the focus is on survival and proportion
of variable should be more High
Degree of Specialization

Moderate
High GROWTH MATURITY High fixed pay / Total Pay

High variable pay / Total Pay

Low START-UP DECLINE
Low Very
Low Sales Growth