Briefly discuss the four key understandings necessary for successful formulation of compensation strategy.

The four key understandings are: understanding your organization; understanding your people; understanding your compensation options; and understanding your compensation constraints. The foundation for the first understanding is the strategic framework described in Chapter 2; for the second understanding is the behavioural framework described in Chapter 3; for the third understanding is the components of compensations strategy described in Chapter 4; and for the fourth understanding is the first section of Chapter 5