There has been a great revolution in compensation due to the increased requirement for the employee skills. Companies demand employees to have varied skills, which in turn require that there should be a change in their compensation. The increase in domestic compensation has been another factor that caused the revolution in compensation. To attain a competitive advantage in the market, companies should offer good rewards to their employees so as to maintain them. The use of new technology and need for globalization has further helped in the revolution of employee compensation (Bohlander, Snell & Sherman, 2001). This essay discusses compensation at Microsoft and how it supports the business strategy.

Main Body

One of the objectives of Microsoft compensation is to show how compensation supports the business strategy. Therefore, employees’ compensation should help the business to attain its strategy. Microsoft Corporation has more than 60,000 employees, and their compensation must help in motivating them to ensure that the strategies of the business are realized. The objectives of Microsoft should be adaptive to the global regulatory and cultural environment. This implies that the objectives have to aim at providing good employee treatment. Therefore, they should ensure adaptation to the cultural environment of employees through better compensation.

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Thus, the objectives should be extended to include an emphasis on innovation and recognition of the employees’ contribution. They must focus on customers and also provide motivation, recruitment, and retention for the employees with the best talents. Through the objectives of Microsoft, customers should be satisfied, which in turn makes them delighted and increases their loyalty. This clearly indicates that the company should be aimed at creating customer value so as to increase its market share. The objectives of Microsoft have to be geared at increasing shareholder value, which can be reached through the growth and profits.

The alignment of compensation in Microsoft extends to show how various levels and types of skills will be paid. Different levels of skills have different pay, which helps the employees feel valued (Milkovich, Newman & Milkovich, 2008). The internal alignment of Microsoft Corporation ensures that the work is sized on factors such as strategic value, business impact, and knowledge and skills. The impact, which the employees make on the company, should actually be determined. It helps in reflecting the compensation, which is to be attached to them.

Job categories in the organization demand different knowledge and skills, which dictate the amount that should be paid for a certain employee. Its alignment helps ensure that there is a control of costs, support for the promotional growth, and reflection of the job responsibilities. Alignment in Microsoft usually emphasizes the differences between the workers, uses the egalitarian pay structure, and crossly trains the employees to suite in different jobs. The executive salaries should not exceed those of the employees’ by a large margin.

The competitiveness of Microsoft should entail total compensation that is actually positioned against their competitors. It extends to show the forms of compensation that it used to surpass the competitors. The firm should try to be a market leader, and its incentive benefits must be dictated by the goals of the business. The corporation should ensure that the benefits received by the employees are unique and generous.

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In order to overcome the pressure from its competitors, Microsoft Corporation should ensure that it pays their employees slightly above what the competitors have to remit to their employees. It also provides health insurance to their employees, which helps in ensuring that the employees are retained and enjoy working in the firm. The strategies may be extended to ensure that they have a unique deal compared to that of their competitors, like giving the employees a free pound of coffee every week. The employee consideration strategies should show the determinants of pay growth. In most cases, a pay increase is based on the team or individual performance. Continuous learning and gaining experience are also the major considerations for a pay increase. Employees can obtain higher pays due to changes in the cost of living, improved skills, and also through personal needs.

The bonuses should be based on individuals and success of the company. If the company is experiencing an increase in its profitability, it should consider increasing compensation, directed to their employees. Therefore, during periods of high profitability, the employees should receive larger bonuses. The firm must recognize both the individual and team performances and award some increments in their pay. The corporation should emphasize on the returns to the shareholders, and the top team of the organization ought to receive some extra pay. The management strategies help in showing transparent and open decisions on all employee payments (Nachtigal, 2006). The decisions regarding payment for the employees should be transparent and clearly understandable. They also show people who are responsible for managing and designing the system, according to which the employees receive compensation.

The employees should be provided with understandable and consistent messages regarding their mode of payment. The management strategies ensure that there is technology support for the employees and managers.Therefore, Microsoft Corporation should ensure that there are no secrets in management. There must be a book that lists the previous payments of both the executive team and all the employees.


The contemporary competitive conditions that exist in the business world make it hard to obtain and maintain the acme talents within an organization. Thus, the compensation strategy is meant to ensure that the company becomes competitive and successful. It also guarantees that jobs are managed in the correct pay brackets and a strict control on personnel budget.

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