Compensation Strategy
Definition
A structured approach to determining how employees are paid and rewarded for their work.
What is a Compensation Strategy?
A compensation strategy outlines how an organization structures pay, bonuses, benefits, and other rewards to align with business goals and market conditions. It includes base salary ranges, incentive programs, equity offerings, and total rewards philosophy.
Why is a Compensation Strategy Important for Employers?
An effective compensation strategy helps:
- Attract and retain top talent
- Ensure internal equity and external competitiveness
- Maintain compliance with wage and hour laws
- Drive employee motivation and performance
FAQs
Is a compensation strategy the same as pay structure?
Not exactly. Pay structure is one part of an overall compensation strategy, which also includes philosophy and incentives.
How often should compensation strategies be reviewed?
At least annually, and whenever there are major organizational or market changes.
Can ExtensisHR help create job descriptions tied to pay bands?
Yes. We offer full support in aligning roles with competitive compensation.
How ExtensisHR Can Help
ExtensisHR partners with clients to build and maintain compensation strategies that scale with growth. We provide:
- Market benchmarking and salary band development
- Total rewards planning and documentation
- Variable pay and incentive design
- Job evaluations and compensation audits