Week 2 Discussion

Compensation Systems

What constitutes an internally consistent compensation system? The �rst thought that may come to your mind is fairness. Of course, this is a critical component of the compensation plan; however, fairness is the outcome to be achieved. Before dashing to the outcome, it is important to put the building blocks in place to support the foundation. There are several factors to consider. To begin the assessment, the HR professional must have a clear understanding of the number of positions required for the organization. From this step, he or she is tasked with designing job descriptions. Job descriptions will include things such as duties, responsibilities, functions, and tasks. A well-developed job description will aid the manager in the employees’ performance evaluation. On the basis of the job description, the HR professional will determine the salary range for each position. There are two factors to consider to maintain internal consistency in the compensation plan, job analysis and job evaluation. Job content, KSAs—knowledge, skills, and abilities—and the work environment must also be considered in the compensation plan. The job analysis should be conducted by a trained and quali�ed individual. The analysis comprises �ve fundamental areas:

Determining the program for the job analysis 

Making sure the analysts are quali�ed to conduct the job analysis 

Determining whether the analyst understands the internal and external factors related to each job 

Determining the data collection method

Writing the job description

Once these objectives have been met, the HR professional can design a competitive compensation system based on the market. The market-competitive pay system should meet the following criteria:

Examine the internal and external factors for the company’s market 

Use compensation surveys to analyze the pay practices of the competitors 

Merge the internal job analysis with the external pay market data 

Finalize the compensation policies.

Did You Know? Review each fact to learn more.

Additional Materials

From your course textbook, Strategic Compensation: A Human Resource Management Approach, read the following chapters:

Building Internally Consistent Compensation Systems

Building Market-Competitive Compensation Systems

From the South University Online Library, read the following article:

Everything You Need to Know about Job Analyses, Descriptions, and Speci�cations. Surveys Examine 2014 Compensation Trends in the U.S., Globally. (https://www.thecampuscommon.com/library/ezproxy/ticketdemocs.asp? sch=suo&turl=http://search.ebscohost.com.southuniversity.libproxy.edmc.edu/login.aspx? direct=true&db=nlebk&AN=529817&site=eds-live)

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