Reference no: EM132308354
After reviewing the “Exercise Strategy: Changing compensation to support changes in corporate strategy” in the chapter 11 of Pay Structure Decisions by Noe et al, please suggest a detailed and descriptive answer to the following question: What are the pros and cons of Corning’s new pay structure?
The case was taken by the chapter 11 (Pay Structure Decisions) of Noe et al book
The case is:
"By realigning its strategy and compensation and benefits programs, Corning Inc., once a traditional economy company, hopes to compete successfully in the new economy. First, the company divested itself of several business units, including Corning Consumer Products. These divestitures reduced its annual revenues from $5 billion to $3 billion. Next Corning pursued a “high-octane” growth strategy in optical communication (optical fiber, cable systems, photo technologies, optical networking devices), environmental technologies, display technologies, and specialty materials. To support this shift in corporate strategy, Corning sought to support growth by creating an environment that bolstered innovation, risk taking, teaming and speed. One major change was in its compensation system. The salary structure was streamlined from 11 grades to 5 broad bands for exempt employees and from 7 grades to 3 brad bands for nonexempt employees. In a new economy company, products have a short life cycle and change in markets is a way of life. This means that the nature of work also changes rapidly, so the detailed job descriptions and traditional promotion paths of the past may not fit this fluid environment. By changing its salary structure, Corning hopes to increase its ability to move quickly in responding to and anticipating customer needs in rapidly changing markets by encouraging flexibility, teamwork, and learning among its employees. Decentralizing more pay decisions to managers contributes to its flexibility, and giving employees an increasing stake in the success of the company by making more employees eligible for stock options contributes to the increasingly tied to individual employee learning and performance as the broad bands allow managers more flexibility to recognize outstanding achievements."