The WorldatWork Handbook of Compensation, Benefits & Total Rewards: A Comprehensive Guide for HR Professionals

Chapter 6. Compensation Fundamentals

At one time, compensation systems were the exclusive domain of the compensation experts. In today’s world of pay transparency, managerial self-service, and shared services, compensation systems are well on their way to being recognized as managerial programs and processes.

In large organizations with shared-services models or centralized compensation functions, HR generalists may broker compensation services on behalf of their business unit or division. In such an environment, the HR generalists must be able to clearly articulate the organization’s business strategy, as well as design and implementation challenges that must be addressed, often with individuals in another time zone who may or may not have ever studied the business needs in detail. In such environments, comprehensive strategies and programs may be designed without ever holding a face-to-face meeting.

In smaller organizations, HR generalists may be expected to assume overall responsibility for everything from developing pay strategy to overseeing pay administration for the local employee workforce. In either case, it is essential for the HR generalist to understand the language of pay.

The following discussion focuses on the “nuts and bolts” of traditional pay programs as they are practiced today in large organizations. New approaches and ideas are constantly being tested; the key, as always, is to ensure that the final system meets the organization’s needs.

The Foundation: A Compensation ...