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Glossary Terms
Compass - The Only Sales Glossary You Need
Compensation analysis systematically evaluates and determines the total compensation package offered to employees within an organization. It encompasses various elements such as salaries, bonuses, benefits, and perks to ensure fairness, competitiveness, and alignment with organizational goals and industry standards.
Compensation analysis is the systematic process of evaluating and analyzing an organization's pay and benefits structure. It involves assessing various compensation components, including salaries, bonuses, incentives, and benefits, to ensure they are competitive, fair, and aligned with the organization's objectives and industry standards.
Compensation analysis typically involves collecting and analyzing data on employee compensation, comparing it with external market data and internal benchmarks, and making adjustments as necessary to attract, retain, and motivate talent while ensuring internal equity and compliance with regulations.
Compensation analysis aims to establish a compensation strategy that supports organizational goals, fosters employee satisfaction and engagement, and maintains competitiveness in the job market.
The compensation analysis process typically includes three key steps:
1. Data collection
2. Data analysis
3. Identifying gaps and setting benchmarks
The techniques you should follow for compensation analysis are:
Compensation analysis helps businesses attract and retain top talent, avoid legal risks, and ensure internal equity. By using compensation analytics, HR teams can identify pay gaps, align pay structures with performance, and remain competitive in the labor market. It also promotes transparency and fairness, which directly impact employee satisfaction and engagement.
Companies typically conduct a compensation analysis annually or during significant organizational changes like mergers, acquisitions, or restructuring. It's also beneficial to perform one when hiring in new markets, launching new roles, or implementing pay equity initiatives. Regular analysis ensures that pay practices remain aligned with market standards and internal goals.
To perform a compensation analysis:
Effective tools and platforms can streamline the process and enhance accuracy.
