Abstract: Systematical strategic fit benefits organization's performance and makes the organization systemic. Researches of performance appraisal strategy and compensation strategy are extensive, but most of them only focused on the single subject without the synergy of them. An extensive literature review is provided in this research to build up a systematic theoretical framework for performance appraisal and compensation strategy. Four propositions of the criteria and methods of performance appraisal and compensation strategy are inferred in this systematic framework. Furthermore, four situations of 2×2 combinations with the criteria and methods above are discussed for the new systematic performance appraisal and compensation strategy. Through this framework, an organization can appropriately focus on employees' representation or individual to evaluate and motive employees with rational or humanistic way.
