The Objectives of Compensation Management

The Objectives of Compensation Management

Compensation happens to be the largest expense that an organization can directly control. Without proper comp planning to devise and execute a strategy, a company will struggle to gain an advantage on their competition.

Why Is Compensation Management So Complicated?

With so many requirements and criteria to juggle, there is no doubt that compensation planning is a complicated area to manage. Here are a few reasons why:

  1. Compensation happens to be one of the top three things an employee looks at when applying for a new position. If expectations are not met, engagement dwindles rapidly. In fact, around 51 percent of US workers are not engaged and compensation plays a huge role in driving this engagement rate.
  2. Compensation not only has to be fair, it also needs to be externally competitive. This means that salary bands have to be determined and benchmarking of comp packages from across the industry play an essential role in ensuring that precious dollars are not wasted.
  3. Compensation needs to comply with rules and regulations like the Fair Labor Standards Act (FLSA) and the Americans with Disabilities Act (ADA).


So now that you know why compensation is complicated, here are the three most important objectives of compensation management that creates an effective & automated plan:

  1. Compensation Management adheres to the guidelines of the comp strategy created during the planning stage so the ROI of the compensation dollars can be maximized. This ROI is determined in terms of increased productivity, better alignment with company goals and simply more revenue per representative.
  1. A Compensation Plan needs to ensure that the right performers are singled out for recognition and individuals with the potential to improve are given the opportunities they need to expand their horizons.
  1. Last but not the least, compensation planning takes a load off the managers so that they can effectively allocate rewards and pay the right people without taking away time from other critical duties.


If you are having trouble creating a compensation plan, maybe it is time for you to re-evaluate your current process.


HRsoft is a leading provider of strategic talent management software that improves manager effectiveness and business results. Our full suite of cloud-based HR software solutions includes applicant tracking software, compensation planning software, total rewards software, stay interview software, performance management software, and content management software. To learn more about our Compensation Management Software, COMPview, click the button below!

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