Business Compensation

Business management
Designing Compensation Systems and Employee Benefits

SETTING THE STAGE FOR STRATEGIC COMPENSATION AND BASES FOR PAY







SETTING THE STAGE FOR STRATEGIC COMPENSATION AND BASES FOR PAY


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1. Describe the three main goals of compensation departments.
The first of the three main goals is internal consistency.   “Internal consistency clearly defines the relative value of each job among all jobs within a company” (Martocchio, Strategic Compensation, 2011).   This ordered set of jobs represents the job structure or hierarchy, and companies rely on a simple, yet fundamental, principle for building internally consistent compensation systems, according to Martocchio.                      
Martocchio’s (2011) study found the following:
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Employees in jobs that require greater qualifications, more responsibilities, and more complex job duties should be paid more than employees whose jobs require lesser qualifications, fewer responsibilities, and less-complex job duties.   In addition, internally consistent job structures formally recognize differences in job characteristics, which therefore enable compensation managers to set pay accordingly.   (p. 22)
“Compensations professionals use job analysis and job evaluation to achieve internal consistency” (p. 22).
The second of the three main goals is market competitiveness.   According... [continues]

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