What should be included in a compensation philosophy?
Most compensation philosophies seek to:
- Identify the organization’s pay programs and total reward strategies.
- Identify how the pay programs and strategies support the organization’s business strategy, competitive outlook, operating objectives and human capital needs.
- Attract people to join the organization.
What are the two basic compensation philosophies?
Generally speaking, there are four basic compensation philosophies: market pay, equal pay, flexible pay or tailored pay.
How do you define salary philosophy?
A pay philosophy is a company’s commitment to how it values employees. A consistent pay philosophy gives the company and the employee a frame of reference when discussing salary in a negotiation. The goal of a pay philosophy is to attract, retain, and motivate employees.
What is total compensation philosophy?
Total Compensation Philosophy: O-5.13
provides it with the necessary flexibility to make compensation decisions consistent with the need for internal equity, the variation in scope and authority for positions, as well as the need to adapt to changes in the external market.
How do you write a compensation strategy?
How to Develop a Strategic Compensation Strategy
- Ask for Employee Input. …
- Benchmark against Competitors. …
- Allocate Budget. …
- Plan for Rewards. …
- Determine Pay Grades. …
- Confirm Compliance. …
- Communicate About Total Compensation.
What are the four types of compensation?
The Four Major Types of Direct Compensation: Hourly, Salary, Commission, Bonuses. When asking about compensation, most people want to know about direct compensation, particularly base pay and variable pay.
What is reward philosophy?
A rewards philosophy creates the basis and guidelines for development of a strategy that is consistent with organizational culture and values. … It is a guide to leaders, developers, employees and anyone involved in the organization’s compensation and benefits programs and processes.
What would be a good reason for a company to select a market plus philosophy of compensation?
A company may use a market plus philosophy because the industry’s cutting-edge nature requires the best and the brightest. Other internal pay factors might include the employer’s ability to pay, the type of industry, and the value of the employee and the particular job to the organization.
What is a compensation structure?
Compensation structures are the pay-based frameworks companies use to establish fair and equitable pay for all employees in the organization. A compensation structure gives a business clear guidelines for assigning initial pay rates, managing raises and distributing bonuses.
What is Google compensation philosophy?
Google operates under a pay for performance philosophy that rewards top performers. This means top performers are eligible for merit increases, which are usually awarded through equity refresh grants and cash bonuses at year end.
What are compensation strategies?
A compensation strategy lays out your organization’s point of view on how you will determine pay and benefits for employees. It aligns all of your compensation resources to your business goals, helps you decide where you want to compete, how competitive you need to be and what you choose to reward.