Craft a Compensation Philosophy
Lay the groundwork for compensation that is competitive, cost effective, and brand aligned.
- A clear compensation philosophy supports strategic decisions that optimize compensation costs while enabling organizations to effectively compete for talent in a competitive labor market.
- A compensation philosophy helps organizations compete for talent by promoting pay transparency and equity, which impact employee retention. It also prevents impulsive responses to retention challenges by establishing a strategic compensation plan.
Need Extra Help?
Speak With An Analyst.
- Get on-demand project support
- Get advice, coaching, and insight at key project milestones
- Go through a Guided Implementation to help you get through your project
Our Advice
Critical Insight
A compensation philosophy provides decision-makers with guidance to ensure compensation practices are consistent and aligned across the organization. To ensure consistency, the compensation philosophy must be driven by the organization’s strategy and support the achievement of business objectives.
Impact and Result
- By
examining both internal and external factors that impact compensation,
organizations lay the groundwork for developing a compensation philosophy
tailored to their unique context. This approach helps create culturally
aligned and strategic target market positions that support organizational
goals.
- Consistent,
clear, and strategically aligned pay decisions are rooted in principles
established in the compensation philosophy.
- Improved
pay transparency as the compensation philosophy provides the foundation
needed to share pay information with employees.
Workshop: Craft a Compensation Philosophy
Workshops offer an easy way to accelerate your project. If you are unable to do the project yourself, and a Guided Implementation isn't enough, we offer low-cost delivery of our project workshops. We take you through every phase of your project and ensure that you have a roadmap in place to complete your project successfully.
Module 1: Assess Current State
The Purpose
- Discuss the organizational factors influencing compensation.
Key Benefits Achieved
- Organizational insights that will impact the approach to compensation.
Activities
Outputs
Identify and discuss compensation challenges.
Discuss internal and external factors influencing compensation.
- Compensation Philosophy Worksheet
Module 2: Craft the Compensation Philosophy
The Purpose
- Conduct a competitor analysis.
- Develop compensation principles.
- Determine target market positioning strategies.
Key Benefits Achieved
- Drafted compensation philosophy.
Activities
Outputs
Identify competitors for talent.
Uncover fundamental compensation principles.
Determine market positioning strategies and targets.
Draft the compensation philosophy.
- Compensation Philosophy Worksheet
- Compensation Philosophy Template
Module 3: Customize the Point Factor Tool
The Purpose
- Select and customize factors aligned with the organization’s context.
Key Benefits Achieved
- Customized and aligned point factor job evaluation tool.
Activities
Outputs
Select strategically aligned factors.
- Strategically aligned point factor tool
Customize factor definitions and levels.
Module 4: Customize the Point Factor Tool
The Purpose
- Weight the factors and allocate points across factor levels.
- Test the tool for bias and accuracy.
Key Benefits Achieved
- Tested point factor tool.
Activities
Outputs
Weight the factors.
Check for bias.
Allocate points to each level.
Test the tailored Point Factor Tool.
- Customized and tested Point Factor Tool
Module 5: Next Steps and Wrap-Up
The Purpose
- Ensure the point factor method is implemented and maintained effectively.
Key Benefits Achieved
- Action plan to continue the job evaluation process.
Activities
Outputs
Review tool testing results.
Develop an action plan.
- Action plan
About McLean & Company
McLean & Company is an HR research and advisory firm providing practical solutions to human resources challenges via executable research, tools, diagnostics, and advisory services that have a clear and measurable impact on your business.
What Is a Blueprint?
A blueprint is designed to be a roadmap, containing a methodology and the tools and templates you need to solve your HR problems.
Each blueprint can be accompanied by a Guided Implementation that provides you access to our world-class analysts to help you get through the project.
Need Extra Help?
Speak With An Analyst
Get the help you need in this 1-phase advisory process. You'll receive 3 touchpoints with our researchers, all included in your membership.
- Call 1: Explore internal and external factors influencing compensation.
- Call 2: Examine potential compensation principles and target market positioning strategies.
- Call 3: Review drafted compensation philosophy.
Contributors
- Diana Holec, Senior Associate, Performance, Reward & Training, Aon Hewitt
- Jackson Lynch, President and Founder of 90 Consulting
- Jason Rowe, Manager of Survey Services, American Society of Employers
- Kent Flint, Chief Operating Officer, Real Estate Webmasters
- Kristen Cifolelli, Director, Research Services, American Society of Employers
- Megan Graham, Senior HR Advisor, Ross Video
- Melanie Hall, Job Evaluation Analyst, London Health Sciences Centre
- Michelle Edwards, Global Director, Total Rewards and Organizational Effectiveness, Agnico Eagle Mines Limited
- Randy Ross, Regional Compensation Specialist, Danfoss Group
- Syma Khan, Senior Manager, Compensation, Loblaw Companies Limited
Build a Total Rewards Strategy
Craft a Compensation Philosophy
Design a Base Pay Structure
Conduct a Salary Assessment
Design a Purposeful Pay for Performance Program
The Rise of Organizational Transparency
