The Primary Goals of Compensation Management

Compensation Management

Compensation management helps enterprise organizations ensure their employee compensation plans are competitive and fair. But that’s not all. In this blog, we look at the five primary goals of compensation management.

Compensation management is the process of determining employees’ salaries, incentives and benefits. For compensation professionals, the goals of designing and administering pay programs can get muddled over time.

Now and then, it can be helpful to step away from the day-to-day processes surrounding compensation management to revisit its overarching goals. Doing so can help you stay focused on making the best possible impact in your organization. Let’s look at five objectives to keep in mind for compensation management:

  • Attract talent
  • Retain and reward the workforce
  • Motivate employees
  • Maintain compliance
  • Drive profits

5 Important Objectives of Compensation Management

1. Attract Talent

Paying competitively is one of the most effective ways to attract talent. This is especially important for in-demand roles, which have a major impact on your business’s success.

2. Retain & Reward the Workforce

Once you have the talent you need, the next objective is to keep them with your company. Compensation also fulfills this goal; incentives like raises and bonuses can keep even long-term employees committed to your organization. Compensation strategies like pay-for-performance models can also help to reward the desired behaviors that drive progress in your company.

3. Motivate Employees

Using pay as a motivator has been a matter of debate for quite some time. Most experts agree that pay alone isn’t enough to engage and motivate the workforce. Yet, it’s true that employees do expect to be paid fairly for their contributions. For this reason, total compensation should include both competitive pay and other factors which can motivate employees, such as mentorship or career development opportunities.

4. Maintain Compliance

One of the simplest but most important reasons for compensation management is to maintain compliance. Adhering to laws such as the Fair Labor Standards Act (FLSA) isn’t just a good practice; it’s essential to avoiding fines and litigation. For this reason, your compensation team should receive ongoing training on up-to-date pay requirements in your specific area.

5. Drive Profits

Finally, compensation plans can be strategically managed to achieve all of the outcomes above while still driving performance – and thus, profits. Of course, this means employees must understand the full value of compensation outside of their base pay alone, so that they feel appreciated and fairly rewarded for their contributions.


Compensation management helps companies attract, retain and motivate employees. It also keeps organizations compliant and profitable. When you focus on these goals, you set up your organization and employees for success.

HRSoft is the trusted global leader in compensation management software whose COMPview solution is proven to control and simplify the full process and allocation of merit, bonus and equity awards to drive manager and employee engagement.