What is an example of the compensation strategy?
One way to establish a framework for compensation is to determine pay grades based on job position and duties. For example, positions in pay grade one may be for entry-level roles, pay grade two for technician roles, pay grade three for managers, and pay grade four for executives.
What is compensation management?
Compensation Management refers to the establishment and implementation of sound policies, programmes and practices of employee compensation. It is essentially the application of a systematic and scientific approach for compensating the employees for their work in a fair, equitable and logical manner.
Why is a compensation strategy important?
Having an established compensation strategy contributes to your ability to predict costs for hiring new employees and providing salary increases. It also helps to avoid situations where pay decisions may be inconsistently applied.
How do you design a compensation strategy?
To develop a successful compensation strategy you need to take the following steps:
- Define your compensation philosophy.
- Link compensation to your overall business strategy.
- Change the culture and reinforce it with compensation.
- Reward the behaviours that drive the results.
- Think total compensation.
How do you develop an effective compensation strategy?
7 Keys To An Effective Compensation Strategy
- Budget Allocation. The strategy should include the organization’s approach to allocating compensation dollars into salary and benefits. …
- Develop Salary Ranges. …
- Salary Audits. …
- Benefit Package. …
- Performance Management System. …
- Legal Compliance. …
- Structured Administration.