NOVEMBER 2021

10 Best Practices
for Compensation
Management

10 Compensation Best Practices
Your organization continues to transform, and your
compensation practices are forced to evolve. Remote
work has expanded your pool for talent and you’re
seeing a workforce unrestricted by geography. DE&I has
become critically important and is being discussed at
the board level.
As you rethink your approach to compensation, consider
each of these 10 best practices and get pay right every
time.
10 Best Practices | 2
TABLE OF CONTENTS
Compensation Philosophy........... 3
Job Analysis................................... 4
Data Sources.................................. 5
Share Data..................................... 6
Market Price................................... 7
Job Structure................................. 8
Budget........................................... 9
Communication........................... 10
Analyze & Monitor....................... 11
Executive Compensation............ 12
 10 Best Practices | 3

1. “An organization’s compensation

philosophy is the first step towards
fair pay. Employers can open the
Develop and Review Your level of transparency throughout
the organization, and develop
Compensation Philosophy trust among employees. The
Your compensation philosophy is a formal statement of the company’s position about
philosophy will help employees
employee compensation. It explains the “why and how” and creates a framework for answer their burning question:
consistency. How is my pay determined?”
■ Decide when you are going to review compensation – Chris Fusco, Senior Vice President of Compensation,
Salary.com
■ We suggest a minimum of annual or even quarterly reviews of market pay vs. internal

■ Tie-in to your employment brand

■ Build out your employee value proposition – Compensation, opportunity, organization

and leadership

Time of Year: Beginning of the year

Products & Services: CompAnalyst Enterprise, CompAnalyst

Market Data, Consulting
 10 Best Practices | 4

2. “Organizations grow and evolve

at a rapid pace, so it is important
to understand how jobs change
Conduct a company-wide job along the way. This will ensure
the people in those jobs meet the
analysis and evaluation needs of the organization and feel
Your company-wide job analysis and job evaluation is a precedent for building your job valued for the contributions they
structure. A job analysis is a process in which you analyze the duties, responsibilities, the make.”
knowledge, skills, and experience for the job. – Garry Straker, Senior Compensation Consultant, Salary.com

■ This exercise should be yearly across all positions

■ To evaluate jobs, you need to understand and document the roles, responsibilities,
skills, licenses or certifications required

■ This process could be done by HR, managers, employees, or outside consultants

■ You want your job descriptions to be competency driven

Time of Year: Q1, ongoing

Products & Services: JobArchitect, Consulting, CompAnalyst

Enterprise, CompAnalyst Market Data
 10 Best Practices | 5

3. “Using multiple surveys is a

requirement in today’s fast moving
pay environment. Using a variety of
Determine your data sources will allow you to put
the pieces of the puzzle together,
Compensation Data Sources not only for your analysis, but for
You’ll use a variety of sources to make sure you cover all your jobs in every location.
the ease and comprehensiveness
You’ll want at least three individual survey sources or one aggregated source (one that that will support your internal
combines data sources for you). Make sure sources are HR or company reported for communications.”
accuracy. If you use crowdsourced data (free online), this should not be used as your
– Greg Wolf, Managing Principal, Salary.com
main data source.

You’ll want data sources that:

■ Have data that is well known and relatively stable over time

■ Have job data that is common across employers

■ Have a reasonable proportion of the work force that holds a given job

Time of Year: Q1

Products & Services: CompAnalyst Market Data, Compdata,

IPAS, Consulting
 10 Best Practices | 6

4. “Participation in salary surveys by

sharing your data with a trusted
survey vendor of choice is an
Share Your Data with the excellent practice for ensuring a
good understanding of the overall
Community data collection process. You’ll
Share your data with the vendor for the data sources you leverage by participating in better understand the survey jobs,
surveys. descriptions, matching process
■ The vendors you pick should have easy ways for you to share your data and data output. Depending on the
vendor, this can be a great way to
■ Make sure they do the matching for you
get survey results at a discounted
The HRIS file is the beginning, but validating matches is the key to accuracy
rate or even free results with
■

Time of Year: Q2 participation.”

– Lenna Turner, Director of Diversity, Equity, and Inclusion;
Products & Services: CompAnalyst Enterprise, Survey Senior Compensation Consultant, Salary.com
Participation, Consulting
 10 Best Practices | 7

5. “The call for pay equity is coming

from all corners and the reality is
that achieving it can only happen
Market Price All Your Jobs when your compensation is both
internally equitable and externally
Market pricing a job is the process used to determine the external value of a job. Market
competitive, making market
pricing with accurate data is the foundation for analyzing and evaluating internal pay
practices against existing market rates.
pricing a critical component of any
compensation program.”
■ Review market
– David Cross, Senior Compensation Consultant, Salary.com
■ Ensure you are bringing in new people at the right market rates

■ Review existing employees to ensure whether you need to adjust

Time of Year: Q3

Products & Services: CompAnalyst Enterprise, CompAnalyst

Market Data, JobArchitect, and Consulting
 10 Best Practices | 8

6. “The foundation of any good

compensation analysis or
people analytics strategy is the
Build a Good Job Structure fundamental tables that underlie
your data. Demographic data
This is the foundation of a good compensation system.
gets more attention since it drives
■ Establish salary and/or job ranges HR processes such as Workforce
■ Build salary structure or job ranges annually to manage, understand, and administer Management, Benefits and
pay data Payroll. The key that is typically
forgotten is the Job Table. The key
Time of Year: Q3
to successful analyses starts with
Products & Services: CompAnalyst Enterprise, CompAnalyst the job table. Reviewing your job
Market Data, Consulting
codes, titles, functions, families,
and level data is important hygiene
for all of your HRMS processes.
Without a good job structure,
recruiting, compensation and
analytics are going to be based on
poor data or even worse incorrect
data.”
– David Turetsky, VP of Consulting, Salary.com
 10 Best Practices | 9

7. “Being proactive in your job and

knowing the details will highlight
you as a strategic business
Manage the Compensation partner across the organization.
Researching the current and future
Budget market pay indicators, provide
You’re responsible for knowing where your organization and your managers stand each context and depth to your market
quarter on the compensation budget. awareness, along with a readiness
■ Work with hiring managers and departments to understand their jobs and to internally communicate
communicate where they stand compensation budgets and your
■ Whether you provide salary increases once or many times throughout the year, having job-level knowledge.”
YTD budget numbers at your fingertips is critical for business success – Greg Wolf, Managing Principal, Salary.com

Time of Year: Q4

Products & Services: CompAnalyst Enterprise, CompAnalyst

Plus, and Consulting
 10 Best Practices | 10

8. “Transparency around pay is

mission-critical. It creates a culture
of trust and enhances employee
Communicate engagement. Managers should
be trained to answer the question
You should provide your hiring managers with a complete picture of how an employee is
‘How is my salary determined?’
paid and how that fits in with the rest of the company (compensation philosophy).
when asked by their employees.”
■ Give your employees access to their compensation statements
– David Cross, Senior Compensation Consultant, Salary.com

■ Help employees understand what other roles they can take within the organization

■ Review your pay policies and practices to determine the extent to which they can be
made transparent

■ Provide visibility to this information often

Time of Year: Ongoing

Products & Services: CompAnalyst Enterprise, CompAnalyst

Market Data, and Consulting
 10 Best Practices | 11

9. “The importance of constant

vigilance cannot be overstated. It
is imperative in terms of managing
Analyze and Monitor risk and meeting expectations
of internal and external
Monitoring requires reporting and analytics capabilities easily at your fingertips. Ideally stakeholders.”
you would have your data sources, jobs, job matches, salary structures, and employees
– Garry Straker, Senior Compensation Consultant, Salary.com
all in one solution.

■ You should look at your compensation results at least once a year but have the tools to
look at this quarterly

■ Focus on fair pay, which is externally competitive and internally equitable

■ Review quarterly where key performers stand to market in the rest of the job family or
company

■ Analyze throughout the year when you hire new people, add new jobs, have turnover,
or have a significant company event

■ Pay equity laws will require you to review where employees compare for “similar” jobs

Time of Year: Ongoing

Products & Services: CompAnalyst Enterprise, CompAnalyst

Plus, and Consulting
 10 Best Practices | 12

10. “The goal of executive

compensation is to incentivize
executives to enhance company
Executive Compensation performance relative to prior years
and relative to its competitors for
Attract and retain talented executives to achieve company objectives (for public or the benefit of all stakeholders. To
private companies).
achieve this goal, organizations
■ You should have access to public company executive compensation data from 10,000 need data to design the right
companies traded on US exchanges
program. We collect all of
■ Build appropriate peer groups using robust search parameters the executive compensation
■ Build reports that include all elements of executive and board compensation disclosures for public company
SEC filings so that you can easily
Time of Year: End of Fiscal Year
create a custom peer group and
Products & Services: CompAnalyst Executive, Consulting then retrieve all of the related
compensation data.”
– Chris Fusco, Senior Vice President of Compensation,
Salary.com

Ready to get
started?
You can transform
compensation at your
organization. Contact us to
learn more or schedule a
personalized demo.
Let’s get started
10 Best Practices | 13
ABOUT SALARY.COM
Salary.com is the leading SaaS provider of compensation market data,
software, and analytics, bringing more of the trusted data and intuitive software
organizations need to get pay right.
Founded in 1999, the company serves over 25,000 survey participant
organizations, over 8,000 business-to-business software subscribers, and
over 30 million employees globally. For more than 20 years, Salary.com has
empowered confident decisions by aligning compensation practices with
recruiting, performance, and development initiatives through easy-to-access
data and meaningful insights.
The market-leading CompAnalyst® SaaS platform accelerates compensation
workflows, delivers real-time data, and powers accurate, equitable, and
competitive compensation. Through its Salary Wizard and pioneering website,
Salary.com delivers continually updated, reliable market pay data and career
content to over 30 million visitors each year. For more information, please visit
the company website at www.salary.com.
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