Compensation administration is a segment of management or human resource management focusing on planning, organizing, and controlling the direct and indirect payments employees receive for the work they perform. Compensation includes direct forms such as base, merit, and incentive pay and indirect forms such as vacation pay, deferred payment, and health insurance. Compensation, however, involves much more than this simple transaction. From the employer’s perspective, compensation is an issue of both affordability and employee motivation.
Compensation does not refer, however, to other kinds of employee rewards such as recognition ceremonies and achievement parties. The ultimate objectives of compensation administration are; efficient maintenance of a productive workforce, equitable pay, and compliance with federal, state, and local regulations based on what companies can afford.
The Compensation Administration Department’s responsibilities include:
- Developing compensation programs, policies, and procedures to meet the needs of the company administrators as they attract retain motivate, develop, and organize their diverse workforce.
- Ensuring compliance with federal and state compensation laws, statutes, and regulations.
- Balancing the need for internal equity while recognizing the desire to be market competitive.
- Evaluating positions consistently and classifying them into appropriate job titles ensuring that they are internally equitable while recognizing the need to be market compete.
- Developing and maintaining the classification and compensation structures.