Question

Are the three main goals of compensation departments equally important, or do you believe that they differ in importance?

Answer 1

Compensation professional promotes effective compensation system by following three main goals which are stated below:

1. Internal consistency: Internal consistency plays a crucial role in analysis of the compensation for the employees working in an organization.This involves:

Job analysis: This method includes collecting, analyzing and listing information for defining a specific job. It also involves contents of a job, the needs of employees, occasionally working situations.

Job evaluation: Different employees in an organization receive different salaries. Compensation professionals need to analyze the prioritized jobs which add more value to the company in terms of goodwill profits. This can be done by comparing the all jobs in the company.

2. Market competitiveness: Retaining skilled personnel to the organization is a part market competitveness. Compensation professional develop compensation system by following strategies:

(a) Strategic alliances : While developing compensation system, some internal and external market force are considered and these are:

Internal factors include:

   - Company financial status

   - Functional abilities

   - Human resource capabilities

External market force:

   - Company profile

    - Foreign Demand

    - Competitveness

    - Long term industry prospects

    - Labour market assessment

(b) Compensation surveys: Pay professionals initially collect information about the competition and then examines it carefully.

3.Identifying and recognizing individuals: In any company, salaries are not equally divided to the employees. It depends on their skill, work and educational qualification. Compensation professional make use of pay ranges and pay grades for designing a pay structure depending on the compensation factors and value.

In my opinion, all the three goals of compensation departments are equally important because all the compensation goals focus on different perspective of compensation system.