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Compensation Philosophy Discussions

Prior to the commencement of any compensation study (be it external or internal study), and prior to the development of strategy for strengthening compensation programs, we discuss and finalize our clients' compensation philosophy. Because each organization naturally possess philosophical beliefs on how employees should be paid, we perform this step to guide our actions.

In some cases, organizations can have multiple philosophies. This practice is acceptable particularly for employee groups or job positions that are “hard-to-fill”.

A good understanding of our clients' compensation philosophy helps us shape our action plans, particularly in relation to:

  • Focus of our inquiry
  • Target labor market
  • Initial and general idea of the desired position in the labor market
  • Analysis of our clients' current state

Business Issues Discussions

Business Issues are pressure points that are preventing organizations from effectively competing in the labor market. In every organization large or small, there exist a plethora of issues that invariably make their way to compensation. For all compensation study engagement that we handle, we discuss and understand these issues. A good understanding of these help us shape our next course of action. Some of these issues are:

  • Internal equity concerns due to salary compression
  • Salary compression issues due to talent competition
  • Salary compression issues due to ineffectual hiring policies and promotion policies
  • External competitiveness issues due to funding

Comparator Organizations Discussions

Once the compensation philosophy and business issues are discussed, documented, and understood, the comparator organizations or peers should be defined. We discuss the qualifying factors under which comparator organizations or peers can be measured. In all cases, we consider geographical boundaries, fiscal position similarities, and workforce strenghts. We also include in the criteria for qualification, other factors our clients provide to us.