Define your compensation philosophy
Establishing a compensation philosophy is the first step towards identifying criteria for your pay decisions. Some organizations have a pay-for-performance compensation philosophy. Your own philosophy should be driven by what you want to reward at your organization (e.g., tenure, responsibility). As you begin articulating your philosophy, aggregate and examine your current pay data, research what other organizations are doing, and ask yourself questions like:
- How can our compensation philosophy support our organizational goals and values?
- How do we want our compensation to compare to our industry and labor market?
- Do our compensation practices and budget allow us to attract and retain the talent we need?
Once you establish a compensation philosophy, pay structures can help you put your philosophy into action.