What is Compensation Management?
Compensation management encompasses the processes, strategies, and systems used to design, implement, and administer employee pay and benefits programs. This includes base salary structures, variable pay, bonuses, commissions, equity compensation, and benefits packages.
Effective compensation management balances organizational budget constraints with competitive market positioning and internal equity.
Modern compensation management systems automate salary calculations, track compensation history, model budget scenarios, and ensure regulatory compliance. These tools support transparent communication, performance-based pay decisions, and strategic workforce planning. Strong compensation management practices attract and retain talent, motivate performance, and align employee rewards with organizational objectives.
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