Foundations of a Compensation Strategy

The most effective compensation strategy is one that develops a clear link between the following components:

Job Description (i.e., work that an employee is expected to perform).

Performance Evaluation (i.e., work that the employee has performed).

External Salary Survey and Internal Salary Comparison (i.e., pay provided to each employee).

Examine the interrelationship between these three components by describing the purpose of each component and how it affects the others.

Then explain how all three components would be used to determine the compensation for an employee. Your examination should include a salary evaluation for a position you are familiar with (Administrative Assistant, Human Resource Manager, Maintenance Worker, etc). The salary evaluation should give results for each of the three components and detail how pay is finally determined for this position based on the three components.

Example of the salary evaluation portion of your analysis:

Purchasing Manager.

Primary functions from the Job Description: To plan, direct, and coordinate the activities of buyers, purchasing officers, and related workers involved in purchasing materials, products and services.

Organizational performance evaluation system:

Outstanding - 6% Increase

Exceeds expectations - 4% Increase

Meets expectations - 2% Increase

Does not meet expectations - No Increase

External Salary Survey: (salary survey, which you can typically obtain online) Monthly salary range at $4,300 - $5,200.

Internal Salary Comparison: (the relationship of this position to similar positions in your organization) Position is similar to Accounting Manager, and should be paid within the same monthly salary range of $4,400 - $4,900.