Employee Compensation Administration

Having a structured program of compensation is essential in optimizing good employee relations by establishing a meaningful and acceptable relationship between work and rewards. Work performed by employees should help the organization achieve its objectives as identified in the organization's overall business strategy which is supported by clearly articulated mission and vision statements.

There are basic tenets or characteristics of an effective compensation program which include:

Internal Equity — Ensure the organization has determined the value for each job as in relationship to one another and develops rules for pay adjustments.

External Competitiveness — Ensure that the organization's pay structure is as competitive as profits or revenue allow.

Affordability — Ensure that the compensation system is affordable as compensation is an organization's largest single controllable expense.

Legally Defensible — Compensation programs must be legally defensible by adhering to specific laws such as Equal Employment, FLSA, Civil Rights, Discrimination regulations, etc.

Understandable — The compensation program must be understandable and appreciated by everyone. Overly complicated systems are not readily accepted by employees nor defended by frontline leaders.

Efficient to Administer — The plan must be easily administered by the human resource team and, most importantly, by frontline management.

It is the role of the SESCO consultant to first understand what the organization wants to accomplish from its compensation system — the corporation's compensation philosophy. It is then SESCO's responsibility to help develop the necessary systems that will support the organization's compensation philosophy while adhering to the basic tenets.

Elements of program development may include:

  • Job Analysis
  • Position Descriptions
  • Job Evaluation
  • Performance Management Tools
  • Local, Regional and National Wage/Benefit Surveys
  • Salary Progression Schedules
  • Program Costing
  • Program Administration Guidelines
  • Implementation Guidelines
  • Employee/Management Training
  • Performance Management Training