Compensation is one of the most critical aspects of a company's operations. Often, salaries and benefits represent one of the largest areas of expenditures for companies; that fact alone would make compensation critical. However, compensation also has a direct effect on a company's ability to attract, hire and retain high-quality individuals who enhance the company's performance. Compensation programs are rarely the only reason that an employee joins or leaves an organization, but dissatisfaction with a compensation program, or a compensation program that is considered substandard by employees can be a significant factor when employees decide to join or leave companies ("The Economics," 2004). For these reasons, companies must be careful when structuring compensation programs to ensure that the program meets the company's financial, strategic and cultural objectives.
             The cultural component of compensation strategies is often overlooked by companies, yet regardless of whether culture is formally considered or not, it plays a significant role in the formation and implementation of compensation plans. Companies that are employee-oriented in their cultures are likely to have creative or innovative compensation programs that reflect that orientation. These companies might provide ongoing training or tuition reimbursement, on-site workout facilities or childcare, and perhaps flex-time for eligible employees. Companies that have a more traditional approach to human resources might focus their compensation strategies on monetary compensation with competitive salaries and pensions, or other types of retirement programs (Mello, 2006).
             The best compensation programs are those that seek to align the compensation and benefits with the organizational objectives of the company. In these instances, incentive programs might be developed that reflect the organizational objectives, such as putting a gain-sharing or profit-sharing program into...