Realigning Compensation Management according to Business Cycle : A Strategic Approach

Understanding of business cycle phases has been the focus of researchers to mitigate negative impacts of business cycle on the organizations. Realigning fixed and variable pay in the pay structure helps organizations in maintaining proper leverage ratio for mitigating adverse impact of recession on profitability and survival of the organization. This article explains business cycle, its impact on organizations and provides a compensation management framework for properly designing pay structure, explains with the empirical analysis fixed and variable pay relationship, and management of operating leverage during different stages of business cycle for effective compensation management in the organizations